Royal Mail shares have halved

COMPANIES facing renationalisation are the most obvious losers from a Labour administration. These include the water firms United Utilities, Pennon and Severn Trent, energy businesses Centrica, National Grid and SSE and Royal Mail, whose shares have more than halved in the last year alone.

It is far from clear how Corbyn would take these groups back into state ownership – or the price at which he would try to do so – but he would almost certainly try to buy them as cheaply as possible, and the shares would fall in anticipation.

Raising the minimum wage to £10 an hour would hit many businesses too, particularly those with large numbers of low-paid employees, such as supermarkets. This could spell bad news for Tesco and Sainsbury’s, already struggling against discounters such as Aldi and Lidl. Higher wages would boost disposable income, but as Charles Hall of broker Peel Hunt points out: ‘Rising labour costs tend to more than offset higher sales at the till.’

Public-private partnerships have been fiercely criticised in recent years. Private firms involved in building or managing projects such as prisons, schools and hospitals have been accused of profiteering and delivering sub-standard services. Construction and facilities management firm Carillion sent shockwaves through the industry when it collapsed last year, while rival Interserve was sold to its lenders just last month, leaving shareholders with nothing.

Shares in peers such as G4S, Serco, Babcock and Capita have already tumbled in recent years, but large investors fear Corbyn could make life even more difficult for these companies.

Commercial property firms could suffer too. Most economists are pessimistic about the UK’s growth prospects under Labour and, if companies make less money or go out of business altogether, rents will fall, property prices will decrease and the number of empty offices, factories and shops will rise. That trend is already starting but it could become even worse, affecting stocks such as British Land and Land Securities. Some brokers worry that Labour might fiddle with inheritance tax and that could affect Aim shares, many of which are exempt from the tax. ‘Many decent-quality companies on Aim could be hard hit if Corbyn changed inheritance tax rules. That might prove very damaging for some of Britain’s best small companies,’ says Charles Hall of broker Peel Hunt. More broadly, firms that are heavily skewed towards the UK economy are likely to be hardest hit by worried investors, including many businesses in the FTSE 250 index.