Stock market winners and losers from the Autumn Statement
Housing and infrastructure
Hammond announced a new £2.3bn Housing Infrastructure Fund to deliver infrastructure for up to 100,000 new homes in areas of “high demand”. A further £1.4bn will be invested to deliver 40,000 additional affordable homes and he also announced a National Productivity Investment Fund of £23bn to be spent on innovation and infrastructure over the next five years.
Russ Mould, investment director at AJ Bell, said brick makers such as Ibstock and Forterra are likely to welcome the plan, above and beyond the £3bn housing fund that has already been announced to “get Britain building”.
While the focus on affordable homes may be of less use to the large quoted housebuilders, Mould said property developers like MJ Gleeson, St Modwen and Henry Boot may also benefit as new sites are sought for fresh housing developments.
“Infrastructure plays such as WS Atkins, Kier Hill & Smith, Balfour Beatty and Renew Holdings will doubtless welcome more spend on road and railways although the news has been so well trailered the stocks did little in the wake of the announcement.”
Research, development and communications
Hammond set out additional investment in research and development, rising to an extra £2bn per year by 2020-21.
Mould said: “The £2bn pot for research and development and innovation may fire investor enthusiasm for intellectual property incubators like Imperial Innovations and IP Group, as well as venture capital trusts, as they seek to nurture the tech and biotech winners of tomorrow.”
The chancellor also discussed his ambition for the UK to be a “world leader in 5G” as he announced a £1bn investment in digital infrastructure “to catalyse private investment in fibre networks and to support 5G trials”.
Shares in telecommunications systems testing expert Spirent were up a fraction on the back of this news and Mould said CityFibre’s shares were up by some 4% while Sky, TalkTalk and BT will be “watching developments here with interest”.
In the private rental market, letting agents are currently able to charge unregulated fees to tenants, often spiralling to hundreds of pounds. As a result, Hammond banned all upfront letting agent fees charged to tenants “as soon as possible”.
Mould said the biggest losers of the day were the quoted real estate agents whose income is under attack from the Chancellor’s plan to abolish letting agent fees.
Shares in Belvoir Lettings, Foxtons, Countrywide, LSL Property Services and Martinco all found themselves out in the cold, with share price falls in the 6% to 8% range yesterday.
Insurance Premium Tax (IPT) – a tax on insurers which is often passed down to drivers – will increase from 10% to 12% from 1 June 2017 to fund some of the commitments announced in the Autumn Statement.
“Despite the chancellor’s decision to increase insurance premium tax shares in major insurers like Admiral, AA and esure look unmoved,” Mould said.
While not announced in Hammond’s Autumn Statement, accompanying documents revealed the government “will continue to seek opportunities for disposals in RBS, but the need to resolve legacy issues makes it unlikely that disposals will occur in the near term”.
Mould said that the Royal Bank of Scotland’s stock drew little succour from the Autumn Statement’s small print, which disclosed that the government is abandoning plans to sell down its stake in the near term.
“The shares fell 2.5% to 203p, way below the government’s 503p a share average purchase price.”