Investing.com – With the UK election quickly approaching, JPMorgan is considering potential related equity investment strategies.
The UK general election takes place on July 4, and opinion polls consistently point to victory for the opposition Labor Party.
“We believe the market impact will be broadly positive,” JPMorgan analysts said in a June 10 note. “The current Labor Party is on a centrist platform and the sense of political paralysis is likely to be left behind.”
Labour’s agenda is moderately focused on economic growth but, crucially, with a likely cautious fiscal approach, the bank said, adding that given the lack of fiscal space, Labor is likely to focus on supply-side reforms to help improve the economy. height.
A likely Labor Party victory would be positive for:
1) Banks. Political stability and policy stability from a Labor Party victory will support the sector, especially without any risks from corporation tax/bank surcharges as was the case during the 2019 election.
2) House builders. Housing is likely to be a key issue in the upcoming elections, with a focus on affordable housing, land allocation for development and reform of the planning system.
3) Retail trade in food products. The Labor Party supports measures such as boosting private sector investment and a continued focus on the cost of living crisis.
A Labor Party victory would be less positive for:
1) Transport – since the nationalization of railways will put pressure on the sector;
2) Energy. Labor has said it intends to increase and extend the Energy Profits Levy and cut some investment-related compensation.
Overall, the bank says the UK share market is trading cheaply, with a low beta play, exposure to China and the highest dividend yield of any major developed market.
JPMorgan has recently turned more positive on the benchmark index.
“We note that the FTSE250 index has tended to outperform since the Bank of England began easing policy and as domestic activity dynamics have improved,” the bank said.