The Investment Column: Spot winners in pounds 15bn society bonanza
Saturday 11 January 1997
Together with the proposed flotations of Norwich Union, Alliance & Leicester and Northern Rock, an estimated pounds 25bn of money that people had not previously counted on will be burning a hole in consumers' pockets.
This represents an unprecedented boost to the national economy, with very uncertain consequences. They are uncertain because nobody knows how much of those windfalls will be squirrelled away and how much blown in an orgy of "what the hell" consumerism. The balance will depend on how good people feel about their finances generally, but against a backdrop of rising house prices, low interest rates and falling unemployment it would be surprising if an awful lot of the cash were not splurged.
Another important factor is likely to be the size of the payouts from Woolwich and Halifax. With payouts averaging about pounds 1,300, many people will take the view that such an amount is hardly going to transform their pension fund but will buy a very nice holiday, or that multimedia PC they've been umming and aahing about for the past year or so. It might make a good down-payment for that low-finance Ford Mondeo they've seen in the garage window or replace that tired sofa.
For those lucky enough to be benefiting from this money-for-nothing handout, the key question is when, if at all, to cash in their chips and take part in the consumer blow-out. For everyone else, the more relevant question is how to benefit at one remove from all that spending.
For new Halifax shareholders, the best advice would be to hold onto the shares at least for the first few weeks or months following the transfer of shares. That is because, unusually for a company worth pounds 12bn on the stock market, the big investing institutions will be heavily underweight with all the shares in the hands of the general public. There will be an unseemly scramble to buy a suitable weighting in the stock, and unless everyone rushes for an early exit, the share price will be bid up sharply. Holding onto Abbey National shares paid handsome dividends after that first conversion.
For everyone else, attention should focus on which sectors and companies are likely to be the biggest beneficiaries of the largess. To answer that question we have drawn up a portfolio of likely building society bonanza winners.
Dixons said earlier this week that computers had been one of its best- selling items and there is no reason to suppose that trend is going to reverse this year. As owner of PC World, one of the leading computer superstores, Dixons should do well.
A pounds 1,300 payout will go a long way to replacing a household's washing machine and dishwasher, so expect sales of white goods to be strong at Comet, which is owned by B&Q to Woolworth's group Kingfisher. Furniture should sell well at MFI, where profits are on a strong recovery tack.
Our other hunch is that Halifax and Woolwich shares will be sold to pay for holidays and new cars. In these sectors we are going for quality, even if the shares already discount much of the good news. Airtours is the best of the bunch in a recovering holiday industry and Reg Vardy looks good value after strong profits growth this week.
- 1 Snoop Dogg and Jared Leto buy a stake in Reddit as A-list invests $50m
- 2 HeForShe campaign: Iceland to follow up Emma Watson speech with UN women's rights conference – for men only
- 3 Car tax disc changes: Two days to go - and they affect you much more than just not displaying a piece of paper
- 4 Ed Sheeran dedicates song to David Cameron
- 5 Now we know whose fault it is if you end up being murdered in Thailand
Snoop Dogg and Jared Leto buy a stake in Reddit as A-list invests $50m
Five-year-old Iris Grace is raising awareness of autism through her extraordinary paintings
Car tax disc changes: Five facts you never knew about your (almost obsolete) tax disc
The Aral Sea: Nasa pictures show how what was once the fourth largest lake in the world has become almost completely dry
Thailand beach murders: Hannah Witheridge 'was raped by two men before being killed'
Isis, we are told, is a 'clear and dangerous threat to our way of life'. I’m sorry, but I just don’t buy it
Exclusive: 'Putin's Russia has been my biggest regret,' says Nato's outgoing Secretary General
The Osborne Ultimatum: Chancellor’s benefits freeze bombshell will affect ten million households
There’s no excuse for Dave Lee Travis’s behaviour, but we need to keep a sense of proportion
Mark Reckless becomes second Tory MP to defect to Ukip in a month
Should gay sex be illegal? 16% of Britons think so
- < Previous
- Next >
iJobs Money & Business
£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...
NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...
£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...
Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...