5 Stocks to Watch Under a Labour Government

Jasmine Birtles 8th Jul 2024 No Comments

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In case you didn’t know (but I’ll bet you already did!) we now have a Labour government. This is the first time in 14 years that the UK hasn’t been under Tory control and there is a lot of talk going on about what this will mean.

In particular, many investors are curious about how the Labour government might affect the stock market. The markets are known for being susceptible to big political events and this might be one of the biggest that we’ve seen in years!

I took a bit of a dive into Labour policies to work out which areas of the market might feel the changes the most. Here are 5 stocks to watch under a Labour government.

1. Rail Stocks

Throughout their campaign, Labour has been clear about nationalising rail services. This means taking private companies out of the picture and making rail services a publicly-owned asset.

As you can imagine, this would be bad news for private rail companies such as Trainline, Stagecoach, and FirstGroup.

Should the nationalisation plans proceed, these stocks could suffer as the government takes over their revenue streams.

Investors in these firms should remain vigilant and evaluate the possible effects on their portfolios.

2. The FTSE100

The FTSE100 is a great indicator of the health of the UK economy. Therefore, the index tends to feel the effects of political changes quite clearly!

Past UK general elections have had varied impacts on the FTSE 100. However, there is bound to be some volatility.

Past performance shows that the FTSE100 performs well after a clear win, which was certainly the case this year. Labour won by a landslide which suggests that the index could see some positive momentum over the next few weeks.

However, it is impossible to predict the future and there is no guarantee that prices will move upwards.

3. Healthcare stocks

Labour policies look pretty promising for the healthcare sector. The party has promised to increase NHS funding, double the number of CT and MRI scanners in the NHS, and build 40 new hospitals by 2030.

However, it’s not all good news. Labour has also pledged to crack down on private healthcare profiteering. This means that companies such as Bupa and Spire Healthcare could see a fluctuation in their stock prices.

If you have healthcare stocks in your investment portfolio, this could be your sign to diversify!

4. Great British Energy

Keir Starmer has plans to create a new publicly-owned energy company, Great British Energy. The new company will ensure that Britain can benefit from the transition to renewables

If this plan goes ahead, it could mean increased competition for private energy companies. However, it might also present new investment opportunities in the renewable sector.

Companies involved in green energy could see a boost, so it’s worth watching stocks in this space for any positive impacts from government investment and policy support.

5. UK AIM Stocks

Stocks in the AIM market (alternative investment market) are known for being vulnerable to political changes. This is because these stocks are tied to small, growth-orientated companies that often rely on government funding and schemes.

In the past, the performance of the AIM market has been more volatile than the FTSE100 after a general election.

Volatility isn’t always a bad thing! However, it’s good to be aware of it.

You should take a look at your portfolio to see if any of the companies that you invest in rely on government contracts. These stocks may see some volatility over the next few months.

If you find that your portfolio is heavily weighted with these stocks, consider diversifying with more stable investments such as commodities or bonds.

It might be time to buy Bitcoin!

If you’re worried about the effects of the Labour win on your portfolio, now might be the time to brave the crypto market!

Cryptocurrencies are not tied to a particular country which means that they are less affected by political events (although not unaffected entirely!).

Out of the thousands of crypto coins that are available, Bitcoin is considered to be the safest bet. In fact, it is sometimes referred to as ‘digital gold’ due to its ability to hedge against inflation.

Buying Bitcoin comes with a lot of risk however, it could be a good way to diversify away from the UK stock market until the waters settle.

I am hosting a FREE Bitcoin event in London on the 11th of July. I will be joined by a panel of experts to talk all about the potential of Bitcoin and other cryptocurrencies. You can sign up for free here.

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