Investor Alert

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March 31, 2015

U.K. stocks to be wary of with election just weeks away

Banks, utilities and gaming stocks could be hit hard after election

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LONDON (MarketWatch) — The U.K. general election is turning into a thriller for politicians and stock investors alike, as the lack of a clear favorite makes it trickier to take a position.

With May 7 approaching fast, polls reflect a neck-and-neck race between the Conservative Party, which leads the ruling coalition government in partnership with the Liberal Democrats, and the Labour Party, creating lots of anxiety about the structure of the future government and its potential impact on U.K. businesses and financial markets.

On top of this, investors also have to worry about the prospect of a 2017 referendum on whether the U.K. should leave the European Union.

Several investment banks have urged investors to remain underweight U.K. equities until the political uncertainty has passed. Instead, they suggest investors should jump into eurozone assets, which are benefiting from a weak euro and aggressive monetary easing from the European Central Bank.

However, some sectors are likely to be affected more than others, and fund managers asked by MarketWatch pointed specifically to utility, banking and gaming as industries that would be better to avoid.

Here’s a rundown of what to expect in the run-up to the election and in its aftermath.

Link to MarketWatch's Slice.