I am interested in investing in some UK energy companies but I am cautious because of Labours plan to nationalise.
How would they assess the appropriate level of compensation for shareholders if they nationalised these industries?
Wouldnât the payouts be in government bonds instead of cash?
Are those who hold a stake in the would be affected companies worried?
Is anyone else put off because of Labours intentions?
I donât really know much about how this would work and would love to hear your thoughts.
John McDonnell: âThe value of any industry that is brought into public ownership is determined by parliament itself, and that will be a detailed assessmentâ
âWhen parliament determines that, what those shareholders will get is a secure bond which is much more secure than what theyâve got at the moment.â
It seems from this article that John McDonnell is saying that parliament will assess the price of the companies and pay out shareholders accordingly and that payment will be in the form of government bonds. If the gov bonds have an interest rate comparable to the companies dividend then they are likely to be well sought after if interests rates havenât risen. Essentially youâd be getting a full dividend without any of the risk that comes from owning the stock.
I think we can all but speculate what will actually happen ultimately but personally Iâm not too concerned and is hasnât put me off buying shares in a water company recently. I still dont think its all that likely that labour will win a gen election for this to happen. Even if it did it sounds like shareholders will probably get a fair payout.
Itâs one of many reasons to fear this Labour government. Corbyn and McDonnell are unreconstructed Marxists and would be terrible for all UK business. Their front bench is made up of the only people who will serve them rather than any talent. It would be great to go back to the days of a credible opposition, I even miss Ed MilibandâŠ
Why are you fearing them if you donât think theyâre a credible opposition?
Itâs good to have a proper difference again. As much as I supported Blair it was a variation on a theme between all the parties at the time
They arenât credible but the promise of âfree stuffâ is very appealing to a lot of people and, given the state of the Tories, we may yet find them in power. The current Labour party is led by people with some very troubling views, who attract some genuinely nasty supporters and support anti-business policies which have been proven time and time to bankrupt nations (see Venezuela) so Iâd politely disagree with you that this proper difference is welcome.
I donât think this is the forum for you to churn out your political viewpoint. But seeing as you started it:
The current Conservative Party (and Government) are a shambling shower led by people with some very troubling views, who attract some genuinely nasty supporters, and support pro-business policies to the detriment of the people, resulting in a rise in rough sleeping, food bank use, NHS waiting times, national debt, train tickets, and utility bills (despite yearly promises to cap them).
See, we can all comment on political parties! Politics is fun.
With regards the original question, no Iâm not worried. I do have some shares that may be affected, but if Labour renationalise my expectation is that I wonât be impacted negatively. Even if I am, that would be outweighed by my bills no longer being padded to pay out shareholders.
Following on from that, this isnât a good place to discuss which political partyâs you simply like or dislike. Itâs divisive, doesnât help investors & thereâs better places to do that elsewhere.
Letâs stick to discussing politics in the context of investing please, if that doesnât happen then Iâll close the thread in order to avoid any pointless arguments.
A lot of utilities have already dropped in price due to Corbynâs comments on this, to the point that they are now pretty cheap and dividends are high. If you donât think theyâll get nationalised they could be a good long term buy. I donât think it will happen even if Labour get in. I donât think they will have a big enough majority or enough support from their own back benches
Gas / Electric Utilities did take a hit - more to do with Government legislation ( price capping for example ) and Capacity Market changes I would say.
Maybe it was that, I was holding National Grid and SSE energy, Iâm still down with both on share price although I think the dividends have just about made up for it. I think SSE was also hit by uncertainty of whether they were going to split off the retail business or merger with someone else or what. Both are recovering a bit over the last couple of weeks
Who knows, transitioning pension fund/bank investments from unstable contractors and ultimately unsustainable utilities to government bonds may be good for stability, especially considering the economic cycle looking forward over the next 24 months and where interest rates are at. Also find McDonnellâs plan on employee equity very interesting.
I do not worry too much about nationalising the rail companies but the things that worry me is at times I see the current Labour shadow cabinet using the of nationalising industries as a way of solving the industries problems. I do worry that there is a point that nationalising industries will cause problems for our economy and the national debt.
Rail is an example of where privatisation hasnât worked, we have some of the highest fares in the world along with some of the worst services. For some rail journeys it can be cheaper to buy a second hand car and drive there than to buy a rail ticket. I would support renationalisation of Rail but Iâm not sure the nationalisation argument holds up so well for some other industries.
I donât support nationalising National Grid because I have shares in them
John McDonnell lists âgenerally fermenting the overthrow of capitalismâ under ârecreationsâ in Whoâs Who. If that happens I will sell all my UK equities, and probably relocate overseas to a more business friendly jurisdiction. Britain would be finished, for five years at least.
