As you may know, the stock market is heavily based on the level of confidence investors have in their specific stocks of choice. In the past few months, investor confidence has been on the floor, but Chancellor of the Exchequer Rishi Sunak’s announcements on Wednesday will have a significant impact on a few sectors, namely hospitality and real estate. Here are what exactly the changes were, and what they could mean for the market.
Housing
One of the flagship announcements made was the elimination of stamp duty for all properties worth less than half a million pounds.
The policy was designed to get people buying houses again after prices and demand collapsed at the beginning of lockdown. With one of the major costs of house buying gone, many will seek out their next house gleefully, and the market will return to normal.
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In stock terms, this could be a coup for your portfolio if you’re invested in real estate.
Many real estate companies struggled through lockdown, and this policy should see a great return to form. As profits come back, so will investors, and hopping on to a real estate company at the right time could be a big win.
Hospitality
The government’s “Eat out to help out” scheme was also launched. Companies can sign up to half their prices, in exchange for government support to cover their losses.
The government’s goal in this is to increase demand in the hospitality sector, but it also benefits the restaurants. This means that many businesses will be undergoing risk-free price falls, boosting their revenues up to unpredictable heights.
Businesses that were signed up will see their usual income, plus that which they make from people tempted in by lower prices. Profits across the sector will skyrocket.
Regarding advice for the stock market, the same idea applies as in housing. Companies will see big profits, so a wise investor will see a big opportunity here.
The scheme starts in August, so picking up shares in restaurants and similar parent companies now will mean you get in before the hype builds, and see significant gains from your investment.
This crisis has offered a few strong investment opportunities in the past few months, so paying attention to the government’s actions will be a simple way of ensuring that you don’t get left behind in the recovery.
Tuesday, October 30, 2018