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Billions wiped off the value of construction stocks
Shares in Britain’s biggest housebuilding firms lost billions in value in the week to 14 January after the Government announced it would ask them to meet the cost of rectifying safety issues on high-rise buildings in the wake of the Grenfell tragedy.
The cost of the work could be up to £4 billion, and the message from Whitehall was if the firms didn’t comply willingly the Government could take legal action.
Between them, the six biggest builders Barratt Developments (BDEV), Bellway (BWY), Berkeley (BKG), Persimmon (PSN), Redrow (RDW) and Taylor Wimpey (TW.) saw the value of their shares slide by £2.9 billion over five days.
Taylor Wimpey, which released a trading update on 17 January, said it had already provisioned what it thought was ‘a reasonable estimate’ of the costs, while smaller rival Vistry (VTY), which saw its shares lose nearly £200 million over the same timeframe, said it would ‘work directly with the Government to deliver a solution’.
Irish-based materials firm Kingspan (KGP), some of whose products have been used to clad high-rise buildings, was even worse hit as its share price fell 10%, wiping €1.8 billion off its market value.
There was little respite for shareholders on 17 January either, with Kingspan stock losing another 2.6% or more than €400 million in value.