Iain Snedden, senior investment specialist at Aegon Asset Management, comments on the sectors that are set to benefit from Labour’s pledges ahead of the King’s Speech tomorrow.
Iain Snedden, senior investment specialist at Aegon Asset Management:
‘Two areas that have been well signposted are housing and clean energy and we would expect stocks with exposure to these to benefit in the coming months. Labour campaigned heavily on housing, pledging to overhaul the planning system that has stymied homebuilding numbers. With a target of 1.5 million homes to be built in England over the parliament, this is a clear positive for housebuilders, as well as related stocks like Genuit and Volution, which focus on the movement of water and air through buildings, and builders merchants.
‘Clean energy is another area the new government has pledged to throw its weight behind. By removing regulations that have constituted a de facto ban on new onshore wind developments since 2017, the government hopes to match other European nations, which have been adding large amounts of onshore wind capacity in recent years. Stocks related to renewable energy have had a tough time globally over the past couple of years, so this commitment could be a much-needed fillip for UK stocks with exposure to the theme.’
‘One other area that may be affected by the change in government is the hospitality sector – another that has not had its troubles to seek in recent times. Labour’s manifesto pledged fairer financial treatment for the sector, so we may see some rates relief for pubs and restaurants. Combined with food inflation coming down and likely imminent interest rate cuts from the Bank of England, there could be some attractive investment opportunities in the sector. That said, there is also the tail risk that the government makes moves to restrict zero hours contract or to raise the Living Wage, both of which would be detrimental to the sector.‘
