What will the UK election mean for the Tesco (LON:TSCO) share price?
Tesco has seen its share price soar on Monday after revealing it is considering selling its Asian business which could fetch as much as £7.2 billion, with a Conservative victory next week capable of sending its stock even higher.
Tesco saw its share price climb 5% after its revealed that it is considering offloading its Asian business, Loftus, which could fetch as much as £7.2 billion.
The supermarket chain said that it had received ‘inbound interest’ for its Asian unit, which generated a fifth of the group’s profits in 2018.
Tesco said that it is reviewing the situation but that ‘no decisions concerning the future of Tesco Thailand or Malaysia have been taken’ at this stage.
Tesco closed at 240p on Tuesday.
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Conservative victory could help send Tesco’s share price higher
Kantar analysis point towards a slowdown in overall sales for supermarkets in the lead up to the election, signalling a clear cooling in spending until the current political cloud is lifted.
‘This highlights the fact that Tesco is intrinsically linked with the health of the UK economy as much as anything,’ senior market analyst at IG Josh Mahoney said.
‘That means the UK-focused supermarkets such as Tesco’s will be looking out for the same elements that will push the pound higher.’
By and large, if the pound moves higher, it is a reflection that companies like Tesco’s should outperform the wider FTSE 100 market.
‘With that in mind, a conservative majority would drive such outperformance, while a Labour led coalition would be expected to led underperformance for Tesco’s as investors consider the potential for higher business taxes and wages for employees,’ Mahoney added.
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