“Has the prospect of a British ISA fired up the UK stock market? Speculation is rife that Chancellor Jeremy Hunt will unveil plans at the Budget to encourage more people to invest in UK stocks,” says Russ Mould, Investment Director at AJ Bell.
“In theory, that could provide a tailwind for UK equities if a significant number of investors invest extra money in UK stocks, pushing up prices. This is all theoretical and there is no guarantee it will play out in this way if the British ISA goes ahead. In reality, people can already invest as much as they like in UK shares via a stocks and shares ISA, so any benefit for UK companies is likely to be relatively marginal. Even if every single stocks and shares ISA holder using their maximum allowance went out and bought £5,000 of UK shares, that amounts to just 0.2% of the UK market’s aggregate value. In reality, most will just re-allocate money in their main ISA anyway in order to keep their overall UK exposure roughly the same.
“That said, it’s notable that the FTSE 100 and FTSE 250 both advanced on Tuesday morning whereas Wall Street experienced a miserable session last night. London Stock Exchange was among the top risers, perhaps as the British ISA could, again in theory, make the UK a more attractive listing venue for companies seeking to trade their shares on a public exchange if there is extra demand for UK stocks.
“Other big moves include British Airways’ parent company International Consolidated Airlines, retailers Marks & Spencer and Sainsbury’s, and chemicals giant Croda – all classic British names which some might view to be undervalued and therefore of interest to a new wave of investors scouring for ideas on the UK market.”
Galliford Try / Breedon / Ibstock
“The UK building industry has had a difficult time off the back of rising borrowing costs and a bleak consumer backdrop. While little has been reported in advance, the sector will be hoping for some morsels of support when Jeremy Hunt stands up at the despatch box later.
“Construction company Galliford Try was in a confident mood, suggesting that if you target the right markets and you get your ducks in a row operationally, then you have a decent shout of performing through economic cycles.
“Galliford focuses on areas like schools, hospitals, prisons, roads and water treatment works. These are areas which, in theory, should be pretty inured to fluctuations in the economy. Although, the precarious state of UK public finances is a risk to future work.
“For now, the company is delivering a healthy mix of increased margins, revenue, profit and dividends. The market will be watching closely for news on how the business can sustain its current momentum when it delivers a capital markets day in May.
“Another name in the space which is impressing right now is construction and infrastructure materials supplier Breedon. The announcement of record revenue shows just how healthy demand is for its products and a big US acquisition also looks a smart move as the company aims to take advantage of some big investment programmes in the country.
“Times are tough for brick maker Ibstock – the company is exposed to a housebuilding sector which has seen a significant decline in volumes as less affordable mortgages have dampened demand. The company is taking out capacity as it looks to reduce fixed costs and it may take some time for the modest uptick in the property market seen recently to feed through to increased demand.”
These articles are for information purposes only and are not a personal recommendation or advice.