The British Labor Party will announce its first national budget in 14 years on Wednesday. UK Finance Minister Rachel Reeves is expected to end months of speculation that the government intends to raise taxes, change rules and borrow money to support long-term investment. Investment bank analysts highlighted several stocks that could rise or fall if the rumored measures are announced or lifted. Individual stocks are listed further below. Bonds Since mid-September, yields on UK government bonds, known as gilts, have risen by about 50 basis points, and rumors about possible policy announcements have begun to circulate. While much of the growth can be attributed to rising yields in global markets, uncertainty over UK government tax and spending policies has also contributed to rising interest rates. Goldman Sachs analysts believe government bond yields will likely fall as bond prices rise after the government finally releases its budget and confirms how it plans to raise taxes and spend taxpayers’ money. “Our economists do not expect the budget to be so tight that it would hamper growth and investment,” Christian Mueller-Glissmann, head of asset allocation research for Goldman Sachs’ portfolio strategy, said in an October report. Nor will it be too loose to endanger fiscal stability. “As budget uncertainty eases and inflation continues to ease, UK long-term yields are likely to decline,” analysts at Wall Street banks added. They recommend investors go short the 10-year bond and go long the 2-year and 30-year bonds. Shorting is the process of borrowing an asset and selling it immediately with the intent of repurchasing the asset at a lower price later and pocketing the difference. Conversely, investors benefit when they take a “long” position when asset prices rise over the long term. The investment bank is also bullish on the FTSE 250 and the pound compared to the euro. Analysts at Investec said the infrastructure and renewable energy company, which is listed as an investment trust on the London Stock Exchange, was trading at a “significant discount” to its value. Analysts added that while the stocks are exposed to unique factors and a higher interest rate environment, their value has been suppressed in recent weeks as government bond yields have risen. Many closed-end investment trusts are priced on the basis that they offer a dividend premium above the risk-free rate on government bonds. “We believe the recent share price weakness represents a potentially attractive entry point; overall, the underlying assets and projects continue to perform well operationally and we believe listed infrastructure exhibits defensive characteristics, i.e. relatively high Initial yields and, over the longer term, at least some protection against inflation remain attractive,” said Investec’s Ben Newell and Alan Brierley. Investec’s buy-rated stocks include Foresight Environmental, Foresight Solar Fund, Greencoat Renewables, Renewables Infrastructure, Greencoat UK Wind, HICL Infrastructure and International Public Partnerships – all of which trade at a discount to their NAV, according to the bank Value 13% to 24%. Alternative Investment Market (AIM)-listed stocks The London Stock Exchange’s junior alternative investment market is under threat from the removal of tax breaks, according to media reports. The chancellor reportedly wants to scrap inheritance tax relief offered to investors holding shares listed on the market in Wednesday’s budget. The move could entice existing investors to sell shares if changes in tax policy could affect them. Investment bank Canaccord Genuity said several stocks could be affected because investors had previously bought them to avoid paying taxes. Ashtead Tech, a specialist rental company that floated on the AIM market in 2023, has seen its revenue double in two years, although the stock has fallen by a third in the past three months. Canaccord Genuity said the company’s shares could rise more than 45% in the next 12 months. “We believe the weakness of the past few weeks provides an opportunity to understand the story: Ashtead Tech is a specialty leasing company servicing the offshore energy industry, primarily oil and gas today, but with a large and rapidly growing footprint in offshore wind. status,” Alex Brooks, an analyst at the bank, said in an Oct. 29 note to clients AT.-GB 1Y Line Aquis Exchange Aquis is one of only two regulated stock exchanges in the United Kingdom. Canaccord analysts noted that the company is in its “strongest position ever.” However, the stock has fallen 15% this year, with the sell-off intensifying over the past three months, sending shares down 37%, according to FactSet data. Analysts noted that the company’s shares have recovered to levels seen in October 2022, when the stock rose 50% over the next month. “The stock is currently trading at 15x 2025 P/E, which we believe provides a very attractive entry point for a true and growing fintech disruptor in high-growth and high-margin industries,” ” analysts Justin Bates and Portia Patel said in a note to clients in October. They expect the stock to rise 210% from the current share price. “We reiterate our buy recommendation as our price target is significantly higher.” AQX-GB 1Y Line — CNBC’s Michael Bloom contributed reporting.
Analysts say these stocks and bonds will benefit from UK budget | Real Time Headlines
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