OREANDA-NEWS. April 20, 2015. Rail operators, utilities and homebuilders are the corporate sectors most exposed to potential significant regulatory or policy shifts following the UK election, Fitch Ratings says. Healthcare, oil & gas and defence companies could also face reform but any impact would probably be limited because policy shifts would be incremental or would only affect a small portion of their business.

Household utility bills have slipped down the political agenda in the last few months due to the improving economy and wage growth overtaking headline inflation, but utilities remain a sector where the political parties' policies vary significantly. A resumption of the rapid growth in bills seen in the first few years of the decade would increase political risk whatever party or combination of parties was in power.

In the rail sector, the Labour Party's plan to create a state-run operator to compete under the existing franchise system would create risks for current operators. Both main parties have policies that would limit the increase in regulated rail fares over the course of the next parliament, which could be negative for rail franchise operators although we do not believe the impact would be significant.

Conservative Party policy on housing has focused on providing financial assistance for buyers, for example, through its Help-to-Buy scheme. These policies tend to push up home prices, which is positive for house-builders' earnings, but could push prices further above their long-term sustainable level, adding to the risk of a bubble and a subsequent correction. Both the Conservative and Labour parties have plans to increase construction, potentially opening up more opportunities for the sector, but we believe house builders could struggle to quickly accelerate construction.

Our full report "Utilities, Rail, Homebuilders Among Sectors Most Exposed to UK Election" is available to subscribers at www.fitchratings.com or by clicking the link above.