Investors can count on opportunities in post-election period

Regardless of which political party makes it into Number 10 next week, there will be opportunities for investors during the post-election period according to The Co-operative Asset Management.

Paul Mcginnis, Head of Research at The Co-operative Asset Management, explains where he believes the best opportunities lie:

Public sector outsourcing

After the election, the need to cut the nation's increasing debt burden will drive a rush of public sector back-office functions, providing excellent opportunities for companies in the support services sector through outsourcing.

Outsourcers work on the basis that they will maintain, and even improve service levels, whilst delivering cost savings of up to 30 per cent - an attractive option to a government looking to cut costs.

Those businesses with diverse business models and already strong relationships with government bodies have most to gain.  Paul Mcginnis believes Serco and Mitie already have expertise and experience in the public sector and are particularly well placed.  

"With the Government under huge pressure to reduce public sector debt, outsourcing back-office functions provides an opportunity to make significant savings without having to cut vital front line public services," he says.
 
Renewable energy

Urgent action is required to secure the UK's future energy supply with a shortage in power generation capacity looming, along with the need to meet ambiguous European targets on greenhouse gas emissions.

Reports suggest that £200bn of investment in renewable energy is required in the UK during the next decade to replace dwindling North Sea gas and the imminent closure of old coal and nuclear power plants.

The UK government also has a stated aim of delivering a cut of 18 per cent in greenhouse gas emissions by 2020, compared with 2008. This requires around 30 per cent of the electricity consumed in the UK to come from renewable sources, compared with just 6 per cent at present.

Mcginnis adds: "Scottish & Southern Energy (S&SE) is strongly positioned to benefit.  

"Renewables already account for over 20 per cent of its overall generation capacity and it is ideally positioned geographically - in windy areas - to help the UK meet its targets.

"Specialist engineering and infrastructure planning consultancies such as RPS should also grow.

"RPS has a variety of expertise in different areas including feasibility studies, environmental impact assessments and other preparatory work ahead of planning applications, in addition to strengths in the technical skills required in construction of renewables projects."

Healthcare

2010 sees the first of the baby-boom generation, born from 1945 onwards, beginning to retire.

Paul Mcginnis believes it will be important for any government to put the plans in place to ensure adequate healthcare and long-term care is in place to ensure the country can cope with its ageing population.

He also suggests that this growing demand for healthcare will be difficult to reconcile against the economic budgetary belt-tightening that is inevitable.  Just as the US has recently grappled with its own health reforms that saw the government take a greater role in healthcare funding, the UK could be faced with its own major rethink on funding for this critical sector.  However, it is certain that the role of the private sector will increase to ease the growing burden of government NHS funding.

Mcginnis says: "Increased private sector involvement will grow the size of the market for a number of Healthcare companies including pharmaceutical and medical device suppliers."

"There will be good long-term prospects for companies like GlaxoSmithKline and Shire with good exposure to these changes in both the UK and US."