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Budget 2017: Stock Market Winners

Autumn Budget 2017: After chancellor Philip Hammond unveiled his Budget speech, we take a look at the stocks which benefit from his reforms

David Brenchley 22 November, 2017 | 4:53PM

Electric vehicles saw a benefit from the Budget

There was plenty of good news for sectors of the UK stock market in Philip Hammond’s Budget, as investors looked away from the obvious beneficiaries of the ambitious housing plans.

Here, we round up some of the biggest winners from the announcement.

Estate Agents

While housebuilders were the big losers on the day, many other companies involved in the housing chain benefited. That included estate agents and Foxtons (FOXT) was one of the FTSE All Share’s biggest risers at over 6%. Countrywide Properties (CWD) was also up over 3%.

Hammond said he wanted to make “the dream of home ownership a reality” once again. He brought in measures to do so, including a pledge to build 300,000 new homes on average per year by the mid-2020s.

He abolished stamp duty altogether for all first-time buyers purchasing properties worth up to £300,000, including on the first £300,000 on the purchase price of properties up to £500,000.

That would be “a stamp duty cut for 95% of all first-time buyers who pay stamp duty and no stamp duty at all for 80% of first-time buyers”, he claimed.

George Salmon, equity analyst at Hargreaves Lansdown, said the market is betting that “giving first time buyers a helping hand will help transaction numbers pick up from the depressed levels we’ve seen so far this year”.

Building Materials Producers

Following on from the housing theme, companies that provide materials for the production of new houses will also benefit should more homes get built.

“The commitment to greater volumes is an important positive for the materials suppliers,” says Anthony Lynch, manager of the JPM UK Equity Core fund. He names brick makers Forterra (FORT) and Ibstock (IBST) and underfloor heating manufacturer Polypipe (PLP) as three beneficiaries.

Paul Spencer, manager of the Morningstar Silver rated Franklin UK Mid Cap fund, also likes Ibstock, which is the biggest brick maker in the country. He says the firm “might be in a very strong position” should we get anywhere near the 300,000 target for new homes. “It looks a very sensible place to be invested,” he says.

Automotives

While the Chancellor gave driverless vehicles a passing mention, the focus is first and foremost on electric vehicles. Hammond confirmed £500 million in funding for both sectors, with four-fifths of that to be spent on improving the electric charging infrastructure.

Neil Brown, co-manager of the Liontrust Sustainable Investment team, says some of the smaller players are likely to benefit, like German firm Infineon Technologies (IFX) and French company Valeo (FR). They make chips for core components of driverless cars like camera, sensors and on-board computers.

“On average, there is £230 of semi-conductor content in a traditional internal combustion engine car but this trebles to around £700 for a fully electric vehicle,” he explains.

Other Sectors

Colin Morton, manager of the Franklin UK Equity Income fund, doesn’t think other measures are likely to have meaningful impacts on most listed equities. However, there will be some that benefit.

Tech start-ups will be boosted by improved funding. While there’s to be a crackdown on so-called “white ciders”, smaller pub and restaurant firms will see positives from a freeze on duties associated with other ciders, wines, spirits and beer.

A further £2.3 billion of investment will be allocated for research & development (R&D) and, alongside a tick up in the main R&D tax credit from 11% to 12% is also good news. “The need for the UK to position itself as a major centre for global R&D has never been more important,” says Mark Tighe, CEO of R&D tax specialist Catax.

Areas such as digital healthcare, automation, cyber security and data analytics will all benefit, according to Patrick Reeve, managing partner at Albion Capital.

 

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article
Security NamePriceChange (%)Morningstar
Rating
Countrywide PLC114.25 GBX-1.30-
Forterra PLC283.71 GBX-0.19-
Foxtons Group PLC77.50 GBX3.33-
Franklin UK Equity Income W Acc1.96 GBP-0.38
Franklin UK Mid Cap A Inc6.17 GBP0.46
Ibstock PLC246.70 GBX0.82-
Infineon Technologies AG22.83 EUR-0.08-
JPM UK Equity Core E Net Acc3.53 GBP-0.11
Polypipe Group PLC373.50 GBX0.46-
Valeo SA59.45 EUR-0.44-
About Author David Brenchley

David Brenchley  is a Reporter for Morningstar.co.uk