Stocks in certain sectors are likely to see notable benefits if Sir Keir Starmer’s Labour party wins in the July 4 elections, as anticipated, according to the CEO of a leading advisory and asset management group. Three in particular stand out as key winners of a Labour win, said Nigel Green, CEO of deVere Group.
“While the election campaign has captured the nation’s attention, its effect on financial markets is expected to remain subdued,” he said. “This is particularly true for the UK’s blue-chip index, which is largely influenced by international factors. However, three specific sectors are positioned to gain from a Labour victory: construction, banking, and renewable energy,” explained Green.
Construction
Labour’s campaign promises include substantial investments in national infrastructure, which would benefit construction companies and contractors. Plans to upgrade roads, schools, hospitals, and other public infrastructure could lead to increased demand for construction services. This surge in infrastructure projects is likely to provide a significant boost to companies involved in this sector, driving growth and potentially improving their financial performance.
Banking
The proposed funding for infrastructure projects and an anticipated boost to sterling with a Labour win might strengthen UK-orientated banks. With loan defaults remaining low and real wage growth coming back, borrowers are expected to remain resilient. The housing market is also showing signs of improvement, further contributing to borrower stability, as will the expected easing of mortgage market conditions.
Renewable Energy
Labour’s commitment to accelerating the decarbonisation of the power grid presents a significant opportunity for the renewable energy sector. By pushing forward the Conservative Party’s decarbonisation timeline by five years, Labour’s policy would necessitate substantial investments. Companies involved in power generation, particularly those heavily investing in renewable energy, stand to gain from increased government financial incentives. The focus on expediting the transition to a greener energy grid aligns with global trends towards sustainability.
This policy could enhance the prospects for firms within the renewable energy sector, providing moderate upside potential. Additionally, power generation utilities, currently investing in renewable technologies, would benefit from the increased support and financial incentives to expand their renewable energy capabilities,” deVere’s Green said.
While the upcoming UK general election is unlikely to cause a major upheaval in the financial markets, a change in government typically leads to a new balance of winners and losers, he added. Green concluded that, “investors will be keeping a close eye on our top three beneficiary sectors as the election results unfold, as they may present attractive opportunities in the post-election landscape.”
