We round up the equity losers from Chancellor Philip Hammond's Autumn Budget 2017, with most of the slack being taken up by the housebuilders.
Housebuilders
The housing shortage that has plagued successive governments was addressed, with Hammond abolishing stamp duty land tax for first-time buyers and pledging an average of 300,000 new homes per year by the mid-2020s.
However, while there was a pledge to build more homes, housebuilders were hit hard by the announcement of review into the practise of landbanking, which has seen listed companies building up their land reserves recently.
Hammond said that if the review, due to report at next year’s Spring Statement, “finds that vitally needed land is being withheld from the market for commercial reasons, we will intervene to ensure such land is brought forward for development”. He threatened compulsory purchases would be ordered if necessary.
Paul Spencer, manager of the Morningstar Silver Rated Franklin UK Mid Cap fund, says he feared Hammond would be too heavy-handed in this department. A faster planning process and greater availability of land would negate the need for housebuilders to have a four-year landbank, he explained.
Blane Perrotton, managing director of surveyor Naismiths, says the review suggests “the tide is turning against” developers. “If this government is genuinely going to make a difference to the level of housebuilding, the gloves need to come off – and you sense they are.”
All the listed housebuilders, including blue chips Barratt Developments (BDEV) and Persimmon (PSN) and smaller players like Bellway (BWY), were down between 1% and 3% in afternoon trading.
Tobacco
Hammond confirmed tobacco prices would continue to rise at inflation plus 2% and slapped an additional 1% duty on hand rolling tobacco this year. A minimum excise duty on cigarettes will also rise, he said.
The UK’s two blue-chip tobacco names, British American Tobacco (BATS) and Imperial Brands (IMB), saw their share prices pare back slightly, by 0.65% and 0.56% respectively. That said, their revenues largely come from abroad so the impact was less severe than it could have been.
Airlines
This one could go either way. It’s been a tough few months for the airlines. They are locked in a price war currently and Brexit uncertainty is clouding the outlook for flights between the UK and European Union.
Hammond announced a freeze on air passenger duty, which will clearly benefit passengers. However, "whether it will feed through to airline profits is less clear", says George Salmon, equity analyst at Hargreaves Lansdown.
"Reducing the fixed cost base only increases scope for price cuts and that doesn't drive weaker players out of the market," he adds.
While easyJet (EZJ) was up today, that was probably an overspill from positive news yesterday where it announced record passenger numbers and rising revenues. The stock is up 7% since Monday. Ryanair (RYA), on the other hand, was down 1.3%.
