The British general election has come and gone and whilst the Conservatives are celebrating a majority victory, other celebrations have been held by British companies throughout the United Kingdom. The FTSE 100 jumped up a massive 2.3% whilst the FTSE 250 climbed an even higher 2.8% to an all time high. Overall this added a staggering £51.3 billion pounds to the value of companies on the FTSE All share index.
(photo credited to 38degrees)
So why has this happened? Well the market initially feared that a hung parliament would hurt the economies recovery and a fair amount of these companies didn’t have faith in Labour and their plans for the UK’s finances. A tory majority has resulted in a continuation of a steady and stable government and the market has responded by posting these rises.
(photo credited to The Telegraph)
What’s interesting to see is which companies have gained the most. We spoke to Mr. Mohideen, a finance expert with many years of experience (see Jezri Mohideen on LinkedIn here), about which company’s value increased the most and he pointed out that energy suppliers Centrica and SSE were probably the most noticeable risers.
Why the sudden rise? They had the most to lose had there been a Labour government instead of a Conservative one. Likewise with real estate agency companies fearing a Labour government and the potential prospect of rent controls. Other noticeable industries with significant rises in company value include banks, outsourcing firms and transport companies; all industries that were predicted to lose out in the event of a Labour majority.
Whilst there are many companies that are happy with the initial outcome of the election, some investors have warned that the long term state of the market is uncertain.