MARKET REPORT: Housebuilders rise as visa rules ease for construction workers to plug labour shortages

Homebuilders rebounded as hopes grew that loosening visa rules could close labor shortages, reduce construction costs and improve margins.

The Interior Ministry this week added bricklayers, roofers, tilers, carpenters, joiners and plasterers to its List of Shortage Occupations in an effort to make it easier for construction companies to recruit foreign workers.

Such measures are expected to ease the pressure on homebuilders listed on the London Stock Exchange.

Danni Hewson, head of financial analysis at AJ Bell, said: ‘The government’s decision to temporarily ease restrictions to allow more foreign builders to fill building gaps in the UK will be a boon to homebuilders.

‘Labor costs have skyrocketed and projects have come to a standstill due to a lack of skilled workers.

“Delays are costly and, with house prices coming under increasing pressure from higher mortgage rates, any opportunity to reduce overheads and protect shrinking margins will be eagerly seized… Investors have not had much bullish on the construction sector in recent months, so any good news is seen as an opportunity to score a bargain as stock prices look quite subdued compared to this time last year.”

Shares in Persimmon gained 4.3 per cent, or 45p, to 1092p, Taylor Wimpey climbed 4.6 per cent, or 4.8p, ​​to 108.9p and Barratt Developments added 3.9 per cent, or 15.9p, to 424.3p.

The FTSE 100 rose 0.6 percent, or 47.27 points, to 7453.69 and the FTSE 250 rose 1.2 percent, or 213.79 points, to 18618.22.

Books continue to fly off the shelves for Harry Potter publisher Bloomsbury. The company praised a ‘good performance’, as sales in the four months to the end of June were 9 percent higher than a year earlier.

JK Rowling’s Harry Potter series remained one of the bestsellers during that period, along with Sarah J Maas’ fantasy novels.

Stock watch – Pelatro

Pelatro stock fell to an all-time low after it warned it needed fresh funds following a series of late payments and litigation.

The marketing software company launched an investigation into payments it owed after one of its key clients said it would miss the deadline this month to repay £420,000.

Pelatro is awaiting payment of approximately £840,000 from four customers in Nepal, Myanmar and Bangladesh.

Shares fell 48.8 percent, or 3.9 pence, to 4.1 pence.

Bloomsbury suggested it remains on track to deliver revenues of £273m and profits of £32.5m in the 12 months to the end of February 2024, in line with expectations. But shares still fell 0.5 percent, or 2 pence, to 440 pence.

Pension specialist Just Group had its best day in the stock market since March after benefiting from higher interest rates.

That helped more than double sales of the company’s pension income to £1.9bn in the six months to the end of June.

Just added that it remains on track to increase its earnings by an average of 15 percent per year over the medium term. Shares gained 9.5 percent, or 7.3 pence, to 84.5 pence.

Payments firm Wise also benefited from interest rate hikes as revenues rose 66 percent to £311 million in the three months to the end of June.

The number of active customers increased by 33 percent to 6.7 million. Account balances reached £11.5 billion, with Wise earning interest income of 3.4 per cent during the period compared to 2.8 per cent at the end of the previous quarter. Shares added 5.9 percent or 39.8 pence to 712 pence.

Dowlais also posted gains after broker Jefferies raised its price target from 155 pence to 175 pence.

Shares in the engineering group, which was spun out of industrial investment giant Melrose (2.3 percent, or 11.4p, to 511.4p) and listed in April, rose 4.4 percent, or 5.2p, to 122.7p.

Polymer maker Synthomer turned the other way after it warned that customer demand was unlikely to improve before the end of 2023.

It said results for the six months to the end of June, where it expected £1.1bn in revenue and profits between £72m and £74m, were broadly in line with market forecasts. Shares fell 8.6 percent, or 6.9 pence, to 73.1 pence.