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With the political risks facing the UK being high at the moment, it wouldn’t surprise me if the share prices of Taylor Wimpey plc (LON:TW) (TW.L), Royal Mail PLC (LON:RMG) (RMG.L) and National Grid plc (LON:NG) (NG.L) come under pressure in the near term.
Since Jeremy Corbyn’s Labour Party apparently wishes to nationalise a number of industries, the threat of them winning the next election could mean that the Royal Mail share price disappoints in the short run.
As well as this risk, Royal Mail also faces an uncertain period due to continued declines in demand within its UK Letters segment. While I think that this could be overcome by the growth prospects of its international operations, as well as the growth potential within its UK Parcels segment as ecommerce becomes more popular, I believe it could take time for it to deliver a turnaround.
National Grid could be another company that is nationalised under a Labour government. This risk could cause its shares to be held back versus the FTSE 100 in my view – in spite of their defensive track record.
I think National Grid could offer long-term income investing appeal. However, I believe that there are other high-yielding stocks that could produce stronger dividend growth over future years. Therefore, it’s not a stock I’m particularly bullish about at the moment.
Taylor Wimpey could also be negatively affected by a Corbyn-led government in my opinion. Labour may seek to focus on supply-side policies in order to try and make housing more affordable, rather than the demand-side policies such as Help to Buy that have been pursued by the current government.
This may mean there is a period of disruption for the housebuilding market, while rumours of possible tax changes to capital gains on primary residences may lead to the housing market drying up to some degree.
In the long run, I’m optimistic about Taylor Wimpey’s financial prospects. I think it has a good balance sheet and may benefit from favourable operating conditions. Its single-digit P/E ratio may factor in the potential win for Labour at the general election – whenever that may take place.
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