Just as British politicians will vote to win or lose on Thursday’s election day, some stocks are destined for the same fate. Analysts at RBC Capital Markets say there are parallels between the market’s current performance and the 1997 election – the last time Britain switched from a Conservative to a Labor government. “The most correlation in 2024 is seen with the period of positive performance around the 1997 election – the last time we had a Labor government come in. However, the positive performance this time is broader across the market spectrum,” RBC analysts led by Mark Fielding said in a research note to clients. on June 26. The FTSE 100 has demonstrated a strong pre-Election performance, with a 7.3% total return this year. That would mark the second-highest pre-election performance since 1992, trailing only the 12.6% surge seen before the 1997 election, according to RBC’s Fielding. “Overall, if a pattern similar to the 1997 election emerges in the future, the periods 1, 3, and 6 months ahead may be strong.” In particular, the FTSE 250, usually more sensitive to UK domestic market conditions, also showed strong growth, more similar to the FTSE 100 than it was in 1997. Although the index fell by more than 2% over the past month, Fielding said. the index usually bounces back by 2.4% in the week after the election results and 2.3% in the next month historically. .FTSE .FTMC 5Y line The investment bank named some sectors and stocks that could see a significant impact of Labor’s victory. Genuit, Howden, and Travis Perkins were highlighted in the Building Materials sector, while Taylor Wimpey and Vistry were highlighted in the housebuilders category. AFC Energy and ITM Power, two companies in the clean hydrogen production sector, are also expected to benefit. Citi analyst Ami Galla also expects the housing sector to be affected by the election results. Galla expects that the reform of the National Planning Policy Framework (NPPF) – promised by the expected winner of the Labor election – could benefit the short-term land banks. “Investor sentiment appears positive on the prospect of planning reforms, driving significant tailwinds for housebuilders and improving the sector’s supply capacity over the medium term,” Galla said in a research note to clients on July 3. The bank specifically highlighted Barratt, Persimmon, and Taylor Wimpey as companies that could benefit from the reforms. “Persimmon and Taylor Wimpey appear best placed to benefit from NPPF reforms to the short-term landbank and potential gains in the strategic pipeline, while Barratt could benefit from higher land opportunities due to balance sheet strength and benefits from the strategic pipeline,” Galla said. . “Barratt and Taylor Wimpey remain the preferred buy-rated names as opportunities arise from potential planning reforms and unexpected valuations.” Downside risk It’s not all worth it for all stocks, analysts said. RBC also warned that certain stocks could face headwinds under a Labor government. These include Technip Energies in the energy transition sector, online retailer ASOS , German-listed boohoo Group and Zalando as well as stockbrokers and asset managers AJ Bell, Rathbones and St. James’s Place. The investment bank also expects London-focused housebuilder Berkeley to also challenge Labor.
Wall Street banks name stocks to watch as Brits head to the polls
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