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The big event for the FTSE 100 this month is the upcoming UK Budget. And that’s something investors should have on their radars.
I tried asking ChatGPT what the Chancellor’s announcement is likely to mean for UK stocks and it’s answers were fairly obvious. It described its view as “moderately negative” but there’s a lot more going on than this.
ChatGPT’s view
The main potential risk, according to ChatGPT, is the possibility of higher taxes, especially in oil and banking. Both of those industries are heavily represented in the FTSE 100.
There’s also a broader risk, which comes from the bond market. If the government’s plan goes down badly, the UK’s borrowing costs could rise, creating a bigger black hole to fill.
One area where it suggested there might be room for optimism,though, is infrastructure spending. That includes rail networks, housebuilding, and net-zero energy investments. I already thought that myself.
Anyway,, this could be positive for a number of UK stocks. But there are a couple that I think are particularly interesting at the moment – one from the FTSE 100 and one from further afield.
LondonMetric Property
LondonMetric Property (LSE:LMP) is a FTSE 100 real estate investment trust (REIT). Despite its name, the vast majority of its assets are based outside the capital.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.
One of the most important things for industrial distribution centres is being close to transport links. So I think the firm’s assets stand to benefit from potential road and rail investments.
The company’s balance sheet does make it sensitive to rising interest rates. So investors need to pay attention to how the bond market reacts and look to manage their risk accordingly.
Growth opportunities, though, are often harder to come by in the REIT sector than elsewhere. Given this, I think LondonMetric Property is one to keep an eye on going into the Budget.
Ashtead Technology
Ashtead Technology (LSE:AT.) is a name investors might not know so well. It’s a firm that leases subsea equipment for exploration and maintenance to companies in the energy sector.
For the first time since 1964, there are to be no new oil wells drilled in the North Sea this year. That’s obviously not good for a business that owns the machinery used in this type of activity.
Around 85% of Ashtead Tech’s equipment, however, can be used either for oil and gas or for renewables. And it has particularly strong capabilities in the offshore wind sector.
The stock has been one of the most heavily-shorted UK shares over the last couple of years. But it’s an obvious potential beneficiary of an increase in net-zero infrastructure spending.
Budget buying
I’m taking the wait-and-see approach going into the Budget. There’s a lot of uncertainty – and I’m certainly not outsourcing my thinking about what might happen to ChatGPT.
Rather than hunting quick wins, I’m looking at the long-term implications. And I think both LondonMetric Property and Ashtead Technology are ones to back to when the dust settles.
