YORKSHIRE’S biggest companies saw their shares shoot up on the shock news that the Conservative party won an outright majority, boosting firms that will benefit from Tory policy on housing, energy and the minimum wage.
The biggest gainer was Yorkshire’s largest PLC, York-based housebuilder Persimmon, whose shares shot up nearly six per cent to close the day at 1746p.
Like other big housebuilders such as Barratt and Taylor Wimpey, Persimmon has suffered in recent months as uncertainty over the General Election made it more difficult to secure planning permission for new developments.
Brewin Dolphin’s Leeds-based divisional director Matthew Wells said: “Persimmon’s shares are up directly as a result of the election. The Conservatives have been very helpful with schemes such as Help to Buy and its home ownership line that dates back to Maggie Thatcher.”
He added that a Labour party pledge to support smaller housebuilding firms and stop large companies hoarding landbanks had also played a part.
“Labour was thinking large firms should be forced to get off landbanks and start building more homes. There would have been political interference if Labour had won.”
Analyst Robin Hardy at Shore Capital said: “The housebuilders have been weak under fears of a Labour administration.
“Rent controls threatened to cause weak house prices by driving an exit of smaller buy-to-let landlords but that risk has now passed.
“Potential pressure for all housebuilders under ‘use it or lose it’ legislation on land will not now happen and the recent trends of high land supply and low competition that have made for a ‘golden era’ for the house builders can continue.”
Retailers such as Bradford-based supermarket chain Morrisons, Wakefield-based budget greetings card retailer Card Factory and over-50s Wakefield-based womenswear retailer Bonmarche also benefited, largely due to relief that Labour will not raise the minimum wage from £6.50 to £8.
“Many retailers are already suffering extreme margin pressure so an increase in the minimum wage would have hit them. These are industries where there are high labour costs so there’s relief in the supermarket arena especially,” said Mr Wells.
Another beneficiary was the financial sector with Halifax Bank owner Lloyds up nearly six per cent at 86.85p and Barclays up nearly four per cent at 258p.
Laith Khalaf, senior analyst at Hargreaves Lansdown said: “While no party claims to be a friend of the bankers, the market perceives the Conservatives to be less unfriendly than Labour.”
Mr Wells said: “We’ve already got the bank levy and HSBC has said it is considering leaving the UK. Labour were looking for more levies.”
Credit lenders Bradford-based Provident Financial (up three per cent to 3130p) and Leeds-based International Personal Finance (up three per cent to 502p) also benefited from the general rise in finance stocks.
The removal of the threat of an energy price cap, promised by Labour, boosted utility companies, which rose four per cent in early trading. Their rise boosted Drax, the UK’s biggest power station, which rose four per cent to 415p.
David Battersby, investment manager at Redmayne-Bentley in Leeds, said: “It’s a positive read across the board. Markets don’t like uncertainty. That level of risk has been taken off the table for the time being. The risk that remains.. is that they (the Conservatives) have promised the electorate a referendum on the membership of the EU.
“Some people were hoping they would have to work with another party, and then perhaps push that policy out.”
Analysts warned that once the euphoria of avoiding a hung parliament wears off, the City will have to brace itself for a referendum on Britain’s membership of the EU.
David Battersby at Redmayne-Bentley said: “The ramifications of that are a concern. The problem is that the EU nations are our largest trading partner. Whilst we are in, we may not like the rules we have to deal with, but if we are out, we have no control whatsoever.”
Brewin Dolphin’s Matthew Wells added: “On Monday it will be straight back to business. What does an EU referendum mean? Manufacturers will be asking ‘Are we in Europe or not’?”