Some of Europe’s biggest power generation companies could win from German elections

Thursday, 01 October 2009
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The pro-business credentials of Germany’s incoming coalition government gave a modest boost to the country’s equity markets on Monday, with investors quick to judge that some of Europe’s biggest power generation companies would be among the corporate winners from Sunday’s general elections, says FT.com.

Shares in Eon and RWE, the utility companies, led stock market gains on Monday because of expectations that the new government would extend the life of Germany’s nuclear power plants.

Both the CDU and FDP favour continued use of atomic power and may repeal a law requiring nuclear plants to close after 2020. The centre-left SPD, which voters sent into opposition after its spell governing in a coalition with Ms Merkel, was more hostile to nuclear power.

The new coalition will face opposition from the left-of-centre parties, several of which said on Monday they would make the new government’s nuclear policy their chief target in coming months.

“Nuclear life extensions should become a reality in Germany,” UBS analysts said. Shares in Eon rose 4.5 per cent to close at €29.48 while RWE rose 4.2 per cent to close at €64.80. Stocks on Germany’s blue-chip Dax index closed 2.8 per cent higher at 5,736.31.

The prospect of a centre-right coalition was welcomed by a wide spectrum of business leaders, partly because it is most likely to support free-market policies and endorse tax cuts, but also because it may prove to be more stable than a continuation of the previous “grand coalition” would have been.

 

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