Britain’s Labor Party is due to unveil its first national budget in 14 years on Wednesday. Britain’s Chancellor of the Exchequer Rachel Reeves is expected to end months of speculation about the government’s intentions to raise taxes, change rules and borrow to support long-term investment. Investment bank analysts are highlighting several stocks that could win or lose if the rumored measures are announced or scaled back. Individual stocks are listed below. Bonds Yields on British government bonds (British bonds) have risen by around 50 basis points since mid-September as rumors began to trickle out about possible policy announcements. Much of the boost can be attributed to rising yields across global markets, but uncertainty surrounding the UK government’s tax and spending policies is also contributing to the rise in interest rates. Analysts at Goldman Sachs believe bond yields could fall as bond prices rise after the government finally releases its budget, confirms tax hikes and how taxpayers’ money will be spent. are. Christian Muller-Grissmann, Head of Portfolio Strategy and Asset Allocation Research at Goldman Sachs, said: “Our economists believe that budgets are not so tight that they hinder growth and investment, but that they are lax enough to endanger fiscal stability.” “We don’t expect it to be much,” Christian Muller-Grissmann, head of portfolio strategy and asset allocation research at Goldman Sachs, said in an October paper. .28 Notes to Client. Analysts at the Wall Street bank added: “Long-term interest rates in the UK could fall as fiscal instability eases and inflation continues to ease.” They recommended investors go short on 10-year bonds compared to long positions on 2-year and 30-year bonds. Short selling is the process of borrowing an asset, selling it immediately, and then buying it back later at a lower price to capture the difference. Conversely, if an investor takes a “long” position, the asset’s price will rise over the long term, making a profit. The investment bank is also bullish on the FTSE 250 and GBP compared to the euro. Infrastructure stocks Infrastructure and renewable energy companies listed as mutual funds on the London Stock Exchange are trading at a “significant discount” to their value, according to analysts at Investec. These stocks suffer from idiosyncratic factors and a high interest rate environment, but their value has fallen in recent weeks due to rising Treasury yields, analysts added. Many closed-end mutual funds are priced based on a dividend premium over the risk-free interest rate on government bonds. “We believe the recent decline in share prices is a potentially attractive entry point, primarily because the underlying assets and projects continue to perform well and the protections our listed infrastructure presents.” Investec’s Ben Newell and Alan Brierley said the characteristics remain attractive, at least in part, the ability to protect against inflation over the long term. Stocks we rate ‘Buy’ include Foresight Environmental, Foresight Solar Fund, Greencoat Renewables, Renewable Infrastructure, Greencoat UK Wind, HICL Infrastructure and International Public Partnership. According to the bank, they are all trading at 13 to 24 percent below their net asset value. . AIM-listed stocks The alternative investment market, a junior market on the London Stock Exchange, is under threat of the removal of tax breaks, according to media reports. In Wednesday’s Budget, the Chancellor reportedly wants to remove inheritance tax relief available to investors who own shares listed on the market. Such a move could prompt existing investors to sell their shares if tax policy changes are likely to affect them. Investment bank Canaccord Genuity said some stocks were likely to be affected because investors had previously bought into them to avoid paying taxes. Ashtead Technology Ashtead Tech, a specialist rental business due to list on the AIM market in 2023, has doubled its revenue in two years, even as its share price has fallen by a third in the past three months. Canaccord Genuity believes its stock could rise more than 45% over the next 12 months. “We believe that the downturn of the past few weeks has given us an opportunity to access this story. Ashtead Tech is a specialist rental operator primarily supplying today’s marine energy industry, including oil and gas. AT.-GB 1Y, however, has a large and rapidly growing position in offshore wind,” the bank’s analyst Alex Brooks said in an Oct. 29 note to clients. Line Aquis Exchange Aquis Exchange Aquis is one of only two regulated stock exchanges in the UK. Canaccord analysts say the company is in its “strongest position ever.” But the stock has fallen 15% this year, and the selloff has intensified over the past three months, pushing the decline to 37%, according to FactSet. Analysts noted that the company’s stock price returned to its October 2022 level, which rose 50% in the following month. “The stock is currently trading at (15x 2025 price/earnings), which we believe represents a very attractive entry point for a true growing fintech disruptor in a high-growth, high-margin sector. ,” analysts Justin Bates and Portia Patel said in a note to clients in October. They expect the stock price to rise 210% from its current share price. “There is significant upside to our price target, so we reiterate our buy recommendation.” AQX-GB 1Y Line — CNBC’s Michael Bloom contributed reporting.
