King’s Speech: Which sectors will benefit from a Labour government? – Sneddenn from Aegon AM

Iain Snedden, Senior Investment Officer at Aegon Asset Management, comments on the sectors set to benefit from Labour’s promises ahead of tomorrow’s King’s Speech.

Iain Snedden, Senior Investment Officer, Aegon Asset Management:

‘Two areas that have been well-marked are housebuilding and clean energy, and we expect stocks with exposure to these areas to benefit in the coming months. Labour campaigned hard on housebuilding, pledging to overhaul a planning system that has made it difficult to build homes. With the target of 1.5 million homes to be built in England in Parliament, this is a clear positive for builders, as well as related stocks such as Genuit and Volution, which focus on the flow of water and air through buildings, and builders’ merchants.

‘Clean energy is another area the new government has pledged support for. By removing regulations that have effectively banned new onshore wind projects since 2017, the government is hoping to catch up with other European countries that have added large amounts of onshore wind capacity in recent years. Renewable energy stocks have had a tough time around the world over the past few years, so this commitment could be a much-needed boost for UK stocks exposed to the issue.

‘Another area that could be affected by a change of government is the hospitality sector – another that has had no trouble finding itself recently. The Labour manifesto promised fairer financial treatment for the sector, so we could see some relief on rates for pubs and restaurants. Combined with falling food inflation and the likely imminent cuts in interest rates by the Bank of England, there could be some attractive investment opportunities in the sector. That said, there is also a risk at the extreme that the government will take steps to curb zero-hour contracts or raise the minimum wage, which would be damaging to the sector.‘