Stock market

it’s time! Here is my FTSE 100 hit list for the general election.

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Yesterday (May 22), the Prime Minister surprisingly announced that the UK would go to the polls in five weeks’ time. Historically, general elections have had an impact. FTSE 100So here is my game plan.

All about expectations

To begin with, it is important to note that the market reaction does not depend on who wins. What really matters is the amount of uncertainty on election day.

For example, if the election in the next few weeks shows a clear party lead, it won’t be a big surprise on polling day if that proves to be the case. In theory, the stock market factors in all current information. Therefore, there should be no major action in this matter.

However, if the polls show that things are too tight, we could see a more volatile response. If it turns out to be a hung parliament (where no single party has enough votes), the stock market is likely to fall early. Again, this is due to the uncertainty of not knowing what to expect.

An area that I focus on.

The way I build my hit list is less about short-term action on Election Day and more about policies that can be implemented in the coming years.

For example, any party will focus on supporting the property sector. Therefore, I have added Taylor Wempe (LSE:TW) on my list. The stock has gained 16% over the past year. However, the FTSE 100 homebuilder has endured a tough few years.

Rising interest rates and the UK cost crisis have weakened demand for construction. People were struggling to get affordable mortgages.

It seems the tide is finally turning. At the latest AGM in April, management commented on this. “Continued market stability through good mortgage availability and continued consumer confidence”.

Clearly, the party in government will ensure that this trust is maintained. Support can range from a reduction in stamp duty for buyers or even a subsidy for Taylor Wempay to hit certain targets. Either way, I think the stock could outperform during this period.

Of course, there is a risk that interest rates (and mortgage rates) will stay high for too long. It has to do with the actions of the Bank of England, not the government.

There are more areas to consider.

There are other areas that I am adding to my hit list. This includes some pharmaceutical companies that should benefit from increased investment in the NHS. Additionally, I am thinking of adding some financial services companies that may do well in advising clients on any tax changes that may occur as a result of the election.

Ultimately, I’m getting my ducks in a row now, ahead of the election. As things unfold on the campaign front, I will be able to narrow down my list and then try to buy stocks shortly before Election Day.


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