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Investors are dumping these FTSE 100 shares after Boris Johnson’s landslide victory

Harvey Jones
Hand drawing a red line between the UK and the rest of EU, Brexit concept.

As expected, stock markets have celebrated Prime Minister Boris Johnson’s landslide victory. We always knew they would.

End to uncertainty

His 80-seat majority puts an end to Brexit drift and should see the UK piling out of the EU at the earliest opportunity. It is a slightly odd thing for investors to celebrate, given that markets would generally have preferred us to stay in the EU. The truth is that they hate uncertainty above everything, and this morning most of that has been cleared away.

There will be no hung Parliament, no endless inter-party squabbles, no second referendum, and probably no Scottish referendum either.

One uncertainty will linger. How Boris Johnson manages to negotiate a trade deal with the EU by his self-imposed deadline of 31 December 2020. As many others have pointed out, getting Brexit done will be a lot harder than many realise. Having a big majority will help though.

The FTSE 100 is up 1.63% at time of writing, and would probably have been higher but for the surge in sterling. A stronger pound is generally seen as bad news for companies on the blue-chip index, as they generate three quarters of their earnings overseas, and they are now worth less once converted back into sterling.

Perhaps surprisingly, many private investors are selling shares rather than buying them, according to new research from The Share Centre.

Lock those profits in

Among its top 20 most actively traded shares in the first 30 minutes of trading after the election, sells have been outstripping buys. The most traded stock, Lloyds Banking Group, saw 10 times as many sells as buys. Next most traded, Legal & General Group, saw five-and-a-half times as many sells, following by spirits giant Diageo with seven times as many.

The picture continued with the rest of the top 10, with investors selling Taylor Wimpey at 12 times the rate they were buying, and a similar pattern for other housebuilders, with Barratt Developments selling 10 times over and Persimmon eight times.

The site’s investment research analyst Helal Miah put this down to profit-taking, as early morning traders and investors took advantage of steep rises among their shareholdings. “We don’t take this as signalling negativity toward the market, just some investors being pragmatic.”

Double-digit increases

They should have a fair bit of profit to take, given that the Lloyds share price is up almost 7% at time of writing. Legal & General is up more than 5%.

The housebuilders are the biggest winners – Taylor Wimpey is up 15% as I write this. Barratt is up 12% and Persimmon more than 10%. It isn’t hard to see why some might be taking profits at the moment.

After a surge like this, share prices have a tendency to settle down. Personally, I prefer to buy on a dip, rather than a spike.

That said, the weeks ahead could be a great time to load up, as many now expect global investors  to pile back into the UK as the political drift of the last three-and-a-half years is over. Here are December’s top picks. And five more stocks to consider.

Helal Miah expects others to do the same. “With much of the cloud being lifted in the days and weeks coming investors who have been shy will slowly begin to put their cash to work again.”

You might want to put your cash to work too.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo and Lloyds Banking Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Motley Fool UK 2019