Member of the Labor Party Keir Starmer is set to become the new Prime Minister of the United Kingdom with a victory over Rishi Sunak– led by the Conservative Party.
The victory marks the end of 14 years of control of the Conservative Party in the United Kingdom. The Labor Party will also have one of the biggest prime ministers in the country in 25 years, as reported by CNN.
“A mandate like this comes with a lot of responsibility,” Starmer said on Friday.
Starmer promised to put “country first, party second” in his victory speech.
UK shares and ETFS: Gains for UK stocks and ETFs were minimal on Friday with election results likely pricing in others analyzing what the ruling Labor Party will mean for certain sectors.
of iShares MSCI United Kingdom ETF EWU it rose 0.5% on Friday. The UK’s largest ETF has $2.8 billion in assets under management and holds 80 stocks representing the country’s largest companies.
The main possessions are:
AstraZeneca PLC AZN
Shell PLC SHELL
HSBC Holdings HSBC
Unilever PLC seat
BP PLC BP
RELX PLC RELX
GlaxoSmithKline PLC GSK
Rio Tinto PLC RIO
Diageo PLC deodorant
Glencore PLC GLNCY
Eight of the 10 biggest holdings are up on Friday at the time of writing, with HSBC and Rio Tinto trading lower.
The main weightings in the iShares ETF are the financials (19.3%), consumer (16.4%) and energy (13.4%) categories.
of Franklin FTSE United Kingdom ETF FLGB also offers country exposure with 107 properties. The fund has the same top 10 holdings as the iShares MSCI UK ETF, in a slightly different order and underweight. The largest ETF categories are financials (19.5%), consumer staples (15.5%) and energy (14.4%).
Another ETF option is iShares MSCI United Kingdom Small Cap ETF EWUS. The ETF holds 231 stocks and is underweighted to the small-cap components it holds. The top categories for ETFs are industrials (21.5%), financials (19.8%) and consumer discretionary (14.8%).
What the experts say: British private bank and wealth management company Coutts sees policy changes from the Labor Party leadership taking time to materialise.
“In terms of what this means for the UK population and our clients, we will be closely monitoring developments in a Keir Starmer government and its potential impact on markets,” Coutts Chief Investment Officer Fahad Kamal said.
Kamal said history shows that UK elections do not tend to have a “long-term impact on markets”.
The CIO said it could be “business as usual” for the UK. An issue to closely monitor is the decline in inflation in the country and the potential for rate cuts soon, which could improve economic growth in the country, he said.
RBC Capital analysts see the UK homebuilding sector benefiting from a Labor victory, as reported by CNBC. Analysts said the new leadership and policy commitments could usher in a “new era” for housebuilding in the country.
“Over the past few years the potential of homebuilders has been constrained, but over the next few years that potential is likely to be unleashed,” RBC analysts said.
It’s worth noting the iShares MSCI UK Small Cap ETF counts the real estate sector as its fourth-largest weighting at 12.3%, which could make the ETF stand out based on politics. The EWU and FLGB ETFs have 0.8% and 1.1% exposure to the real estate sector, respectively.
Allianz also sees opportunities in UK housebuilders with the Labor Party victory and possible interest rate cuts ahead.
“We expect the rules and regulations around planning permission to be eased quickly by the next government,” Allianz said.
Allianz also sees opportunities in UK-listed mining companies thanks to the electrification of the power supply.
Citi has a preference for the FTSE 250 over the FTSE 100, preferring small and medium-sized companies over large-caps, as reported by Investing.com.
“We see an improved balance of risks for UK SMID caps, which have underperformed but are expected to grow better against large caps. SMID caps are also better positioned to benefit from lower rates and an improvement in deals,” Citi said.
Sectors such as real estate and utilities were mentioned positively by Citi in post-election comments.
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