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British home building stocks climbed Friday following the Labour Party’s landslide win in the U.K. general election, and that stock sector is among four others likely to benefit from the center-left party’s victory, Interactive Investor said.
The Labour Party on Thursday picked up 211 seats, leaving them controlling 411 of the 650 seats in parliament. With the 14 years of Conservative Party ruling ended, Labour Party leader Keir Starmer has become the country’s new new prime minister.
“These are early days, and some analysts wonder whether the scale of its victory might give the new government the confidence to be bolder than Labour’s relatively timid manifesto,” David Prosser at online investment platform Interactive Investor said in a note Friday.
Fund managers are starting to identify certain stocks set to benefit from a Labour administration, and here are five sectors “feeling the glow of a Labour victory,” Prosser said:
Housebuilding
Homebuilding stocks rose on the London Stock Exchange, with Vistry Group (OTCPK:BVHMF) advancing 3.4% and Taylor Wimpey PLC (OTCPK:TWODF) up 2.8%. Also, Barratt Developments (OTCPK:BTDPF) gained 2.4%, and Persimmon (OTCPK:PSMMF) picked up 2.2% as did Berkleley Group (OTCPK:BKGFY).
The Labour Party has pledged to build 1.5 million new homes within the first five years of party rule, predicated on reforms to planning laws. Prospects for home builders and the broader construction sector are “highly encouraging over the medium term,” Simon Murphy, manager of the VT Tyndall Unconstrained UK Income fund, told Interactive Investor (II). Murphy’s portfolio includes Vistry Group, Breedon Group (OTCPK:BRDNF), Howden Joinery Group (OTCPK:HWDJF) and Kier Group (OTCPK:KIERF).
Consumer and retail
Consumer-facing stocks should advance on the back of a “post-election feel-good factor,” accompanied by better economic news, including the potential for interest rate cuts from the Bank of England, said II’s Richard Hunter. Primark owner Associated British Foods (OTCPK:ASBFY), retailers Next (OTCPK:NXGPY) and Marks & Spencer Group (OTCQX:MAKSF) are on his list of likely beneficiaries, as is building materials company Travis Perkins (OTCPK:TVPKF).
Renewables
II said Labour had been widely criticized for watering down its commitments to invest in decarbonization and the transition to green energy. But Labour has a plan to create GB Energy, a publicly owned company that will aim to catalyze increased private sector investment in wind and solar power and other areas.
Infrastructure
“Infrastructure investors are hopeful that the new government will find the resources for a major injection of capital into the country’s creaking transport and utilities networks, as well as new digital projects,” Prosser said. Investment partnership J. Stern & Co. told II it purchased stock in Xylem Inc. (XYL), saying the water technology company will benefit from investments in the U.K. water industry.
Banking
Labour is planning to impose additional taxes on parts of the financial services sector, but Tony Gibb, head of investment solutions at Artemis, told II that “greater political and policy stability is a positive for the sector.”
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