Shares in utilities if there was a Corbyn government
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bowlhead99 wrote: »- don't hold shares in individual companies in specific industries without also having shares in companies in all the other industries too. Then you don't have to dodge in and out of sectors.
agreed. for instance,i hold some national grid shares, which is 1 that labour apparently want to nationalize. but that's a small part of a more diversified portfolio, so it's not that big a deal what happens to it.
clearly, if it does get nationalized, they will pay something like the market price - it would be daft for them to just confiscate the shares (despite what some posts have suggested). so it would be a question of deciding where else to invest the cash.
it may be that the possibility of this happening is currently holding down the prices of affected shares a bit. i'm not sure.
disagree, because it's not unaffordable: it pays for itself.- don't buy or sell shares in an industry based on posturing by a politician who has come up with an uncosted / unaffordable populist idea which he floats during a time when he knows he's not going to get a majority government and won't have to deliver on it.
e.g. suppose the UK buys all national grid shares for £Xbn (in cash).
since it's a long-term investment, it would be sensible for the UK to fund that by selling £Xbn of new long-term gilts (in addition to however many gilts it was already going to sell).
the result of those 2 transactions is effectively a swap, between the UK and private investors (considering private investors as a group), of £Xbn of national grid shares for £Xbn of long-term gilts.
long-term gilts are a very low-return asset, paying less than inflation. (and it might be a good idea to make these gilts index-linked gilts.)
national grid shares are a higher-return asset, perhaps giving a return of inflation + 5% a year. (or that may be slightly over-optimistic - but definitely a few percent on top of inflation.)
so, assuming the government ran national grid in exactly the same way it's being now, they'd be making a profit of c. 5% a year on this capital. (and private investors, considered as a group, would be making less.)
in fact, the idea wouldn't (i hope) be to run it in exactly the same way. they would presumably be aiming to run it with lower profits, by adopting policies of
1) lower prices
2) accelerated investment
national grid also has large borrowings of its own. and when it's publicly owned, these could be replaced with gilts, reducing the company's cost of borrowing. (again, this is a swap, in which the UK gains, and private investors lose, because they end up holding some very-low-return gilts, instead of some slightly-higher-return corporate bonds.)0 -
Most utilities have debts which dwarf their market cap.Yeah just started looking up the market caps
The market cap is based on what profits they are expected to make in the future if the regulatory climate remains as it is now.“It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair0 -
Or regulate the prices they can charge to trash their share price first?I would imagine if a future Government decided to renationalise they would simply pick a fixed date and compensate shareholders based on number of shares held and the share price on that date.“It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair0 -
Glen_Clark wrote: »Most utilities have debts which dwarf their market cap.
The market cap is based on what profits they are expected to make in the future if the regulatory climate remains as it is now.
Indeed it's also not just debt but the wider spread of liabilities for things like pension schemes, decommissioning old infrastructure and all the usual skeletons in the closet .Glen_Clark wrote: »Or regulate the prices they can charge to trash their share price first?
Interesting, pump and dump in reverse giving the corporates, market and shareholders some of their own medicine.0 -
Would you want invest in anything in the UK if we return to the 1970's with these dinosaurs running the country.0
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Interesting. And what do you think that approach might have on your ability to borrow the billions of pounds you'll need to implement the other policies in your party's manifesto
No need to borrow it, just print it.and what will be your employment policy given that anyone planning investment in jobs and business in the UK will be running for the hills?
Close the borders.
We've been through this a hundred times before.0 -
If I was Corbyn I would not even waste time on "affordability"
Simply use the emergency powers acts to sequester and nationalise the lot inc all the PFI's overnight without any compo to be paid at all.
Additionally it would mean any future conservative gov could never privatise them again as everyone would know a future Labour gov would do the same thereby making the shares in any privatisation unsellable.
Or if he was feeling generous pass a two line two para act nationalising the lot and ram it though parliament in a day (much like the 1971 Rolls Royce emergency nationalisation act)
May need to use the parliament act to side step the Lords.
Should get the message across.....
haha, simple isn't it!
Then they would wonder why Ford doesn't want to build a new £1bn factory in the UK? (hint: the Government has shown its not against stealing).
Rolls Royce in 1971 was a different kettle of fish, it was going under.0 -
martinsurrey wrote: »haha, simple isn't it!
Then they would wonder why Ford doesn't want to build a new £1bn factory in the UK? (hint: the Government has shown its not against stealing).
Rolls Royce in 1971 was a different kettle of fish, it was going under.
Car manufacturers don't want to build new factories in the UK in case they are on the wrong side of trade barriers in a couple of years time. The thought of thousands of foreign customs officers with the power to hold up their just-in-time parts deliveries and bring their production lines to a stop is enough to put the wind up any manufacturer.
As I understand it, Britain is the only major country in the world to have sold its power and water supplies to foreign corporations. So renationalising them would not be seen by the rest of the world as a socialist extremity. Especially since they have borrowed vast amounts of money to pay Director's bonuses and dividends.“It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair0 -
Nationalisation of utilities would probably be a good thing for utilities investors.
It is not clear exactly how nationalisation would work, but I expect that investors would be paid a premium above the market price (which is what typically happens when publicly listed companies are taken over by competitors or are nationalised).
The more significant risk for your investment would be increased regulation without nationalisation. Increased regulation of utilities companies will damage their share price and turn them into quasi-state industries, but in that situation no compensation would be paid.
You should note that an energy price cap is Conservative policy. As such, from the perspective of your investment, you should probably be more worried about a majority Conservative government than a Corbyn government.
The facts are that Centrica's share price has dropped by 50% since the Conservatives came to power. So you shouldn't just focus on Labour bashing - there is plenty of risk with the Tories too.0 -
It will never happen. Even if Corbyn gets into Downing Street, the Germans and French who own most of our utility companies would not permit renationalisation...assuming Corbyn wants to remain in the single market.0
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