London stocks hit by BT nationalisation pledge

London, Nov 15 (AFP/APP): London stocks slid Friday, bucking gains elsewhere, after Britain’s opposition Labour Party vowed to nationalise parts of telecoms giant BT and offer free broadband internet in an eye-catching election promise.

Labour leader Jeremy Corbyn, hitting the campaign trail in the city of Lancaster in northwestern England, said he would bring the parts of BT that deal with broadband into public ownership, as part of a sweeping programme of nationalisations.

BT shares dived 3.7 percent in morning deals but then later recovered somewhat, while dealers digested news that BT’s broadcasting division was awarded exclusive broadcast rights to UEFA’s European football matches until 2024.

Corbyn is seeking to seize the initiative from Prime Minister Boris Johnson’s Conservative Party ahead of the December 12 election that has been dominated so far by Brexit.

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“The relatively muted share price response likely reflects investors’ scepticism about the plan getting off the ground,” said Russ Mould, investment director at online broker AJ Bell.

“Current polling suggests Labour is unlikely to win a majority in the looming election, however if the party was to enjoy a late surge in the polls, BT shareholders might start to get a little bit more nervous.”

Corbyn proposes to privatise BT’s Openreach division, which runs almost all of Britain’s existing digital network, and other elements of the firm to create a new public entity, British Broadband.

Labour estimates the plan will cost some £20.3 billion (23.7 billion euros, $26.1 billion), but some analysts were quick to pour cold water on the plans.

“Labour plans to nationalise the BT broadband network sent the firm lower,” said IG analyst Joshua Mahony.

“With the party planning to provide free fibre optic broadband via taxation of big tech firms, this proposal has a wide reach that would essentially wipe out the whole broadband business in the UK.

“However, with BT shares having recovered much of the early decline, there is a feeling that even if Labour enter government, they will likely be in a coalition that limits such radical spending proposals such as this.”

In later morning deals, BT stock was down 2.2 percent at 191 pence on London’s benchmark FTSE 100 index, which was down 0.5 percent.

Elsewhere, most Asian and European stock markets banked higher on resurgent trade war optimism, dealers said.

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Asian indices mainly rose as trade hopes were given a boost by US President Donald Trump’s economic aide saying “enormous progress” had been made in talks with China, easing recent concerns that they were stumbling.

The gains came after top White House adviser Larry Kudlow said that the long-awaited mini trade deal with China was on track as part of a wider pact.

“The deal is not complete but we’ve made enormous progress,” he told reporters, adding that the talks were “coming down to the short strokes”.

His comments follow a week of unease about the much-vaunted talks, after Trump dismissed Chinese claims of a plan to roll back tariffs as the negotiations progress, while reports said Beijing was uneasy about some aspects of the developing deal.

Hong Kong was marginally up, having shed almost five percent over the previous four days as the city was wracked by violent protests, with police saying the rule of law was on “the brink of total collapse”.

The increasingly violent standoff has also fanned concerns about possible intervention by Beijing, with Xi Jinping warning Thursday that Hong Kong’s cherished “one country, two systems” principle was being threatened by the protests, which are in their sixth month.