Shares of Corbyn’s Nationalization Targets Soar After He Quits

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Shares of companies targeted by Jeremy Corbyn for nationalization surged as the Labour leader said he would stand down after a heavy defeat to Boris Johnson’s Conservatives at the U.K. general election.

Sectors including utilities, transport and mail all benefited, with British Gas-parent Centrica Plc surging as much as 18%, the most in its 22-year history as a listed company, rail operator Stagecoach Group Plc spiking as much as 14% and postal group Royal Mail Plc rising 11%.

“The risk of nationalization has been taken off the table for good,” analysts at Sanford C Bernstein Co. wrote in a note. “We see this as very positive for the U.K. regulated utilities.”

Nationalization risk has weighed on several industries as the Brexit impasse made a general election more likely, amid concern a Labour government would seek takeovers at below-market prices.

The extent of potential upside from here will be determined not only by Corbyn stepping down as leader, but by Labour’s willingness to move away from the nationalization pledges in its manifesto, Christopher Laybutt, a utilities analyst at JPMorgan Chase & Co., said in a note following the election result. The party has so far attributed its defeat to the Brexit debate, rather than its domestic policies, he noted.

Johnson’s victory also added potentially good news for some utilities stocks in the promise of lower taxes and policies to shift the country toward net-zero greenhouse gas emissions that will include a massive push toward more renewable energy.

Another stock to benefit Friday was BT Group Plc, jumping more than 10%, as Corbyn’s pledge to re-nationalize the company’s national fixed-line network Openreach faded.

Corbyn’s Labour also pledged back in 2017 to buy up shares of Royal Bank of Scotland Group Plc that the government does not already own, and break it up into local public lenders, but the party moved away from the plan more recently, and did not include it in its pre-election manifesto. RBS shares surged as much as 14% Friday along with domestic banking peers.

Bloomberg.com