United Kingdom Stocks, ETFs To Watch After Keir Starmer, Labour Party Win – AstraZeneca (NASDAQ:AZN), BP (NYSE:BP)

Labour Party member Keir Starmer is set to become the new prime minister of the United Kingdom with a win over the Rishi Sunak-led Conservative Party.

The win marks an end to 14 years of Conservative Party control in the United Kingdom. The Labour Party will also have one of the largest majority government leads in the country in 25 years, as reported by CNN.

“A mandate like this comes with a great responsibility,” Starmer said Friday.

Starmer promised to put “country first, party second” in his victory speech.

UK Stocks & ETFS: Gains for United Kingdom stocks and ETFs were minimal on Friday with the results of the election potentially priced in and others dissecting what the Labour Party in control means for certain sectors.

The iShares MSCI United Kingdom ETF EWU is up 0.5% on Friday. The largest U.K. ETF has $2.8 billion in assets under management and holds 80 stocks representing the largest companies in the country.

The top holdings are:

AstraZeneca PLC AZN

Shell PLC SHEL

HSBC Holdings HSBC

Unilever PLC UL

BP PLC BP

RELX PLC RELX

GlaxoSmithKline PLC GSK

Rio Tinto PLC RIO

Diageo PLC DEO

Glencore PLC GLNCY

Eight of the 10 largest holdings are up Friday at the time of writing, with HSBC and Rio Tinto trading lower.

The top weightings in the iShares ETF are the categories of financials (19.3%), consumer staples (16.4%) and energy (13.4%).

The Franklin FTSE United Kingdom ETF FLGB also offers exposure to the country with 107 holdings. The fund has all the same top 10 holdings as the iShares MSCI United Kingdom ETF, in a slightly different order and at smaller weightings. The ETF’s largest categories are financials (19.5%), consumer staples (15.5%) and energy (14.4%).

Another ETF option is the iShares MSCI United Kingdom Small Cap ETF EWUS. The ETF holds 231 stocks and has smaller weightings for the small-cap components it holds. The top categories for the ETF are industrials (21.5%), financials (19.8%) and consumer discretionary (14.8%).

What Experts Are Saying: British private bank and wealth management company Coutts sees policy changes from the Labour Party leadership taking time to materialize.

“In terms of what this means for the U.K. population and our clients, we will closely monitor the developments of a Keir Starmer government and its potential impact on markets,” Coutts Chief Investment Officer Fahad Kamal said.

Kamal said history shows U.K. elections don’t tend to have a “long-term impact on markets.”

The CIO said it could be “business as usual” for the United Kingdom. One item to closely monitor is falling inflation in the country and the potential for rate cuts soon, which could improve economic growth in the country, he said.

RBC Capital analysts see the homebuilding sector in the United Kingdom benefitting with a Labour Party win, as reported by CNBC. The analysts said the new leadership and policy pledges could lead to a “new age” for homebuilding in the country.

“Over the last few years housebuilders’ potential has been hamstrung, but over the next few this potential is likely to be unleashed,” the RBC analysts said.

It is worth noting the iShares MSCI United Kingdom Small Cap ETF counts the real estate sector as its fourth-largest weighting at 12.3%, which could make the ETF stand out based on policy. The EWU and FLGB ETFs have 0.8% and 1.1% exposure to the real estate sector, respectively.

Allianz also sees opportunity in U.K. homebuilders with the Labour Party win and likely cuts to interest rates ahead.

“We expect rules and regulations around planning permissions to be quickly relaxed by the incoming government,” Allianz said.

Allianz also sees opportunity in U.K.-listed mining companies thanks to the electrification of the energy supply.

Citi has a preference for the FTSE 250 over the FTSE 100, preferring small to mid-cap sized companies over large caps, as reported by Investing.com.

“We see an improving balance of risks for UK SMID caps, which have underperformed, but are expected to have superior growth vs. large caps. SMID caps are also better positioned to benefit from rate cuts and a pick-up in dealmaking,” Citi said.

Sectors like real estate and utilities were mentioned positively by Citi in the post-election comments.

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