The background of the HS2 has been long and controversial, with many people threatened with being uprooted from their homes and much debate around the large expense.
However, the struggle has seemingly been won as the UK government announced its plans to approve the HS2 project.
The route, which is set to link London, Birmingham, Manchester and Leeds, aligns with the government’s desires to create more jobs and rebalance the country’s economy.
The project, which is already running behind schedule and over budget, is now due to be completed in full by 2040.
Project Clarity
After much confusion over the status of the project, the recent statement from Prime Minister Boris Johnson giving the project the green light has worked to fix some of the uncertainty that had been hanging over HS2 and its associated engineering companies.
Not only has the government backing for HS2 had a direct impact on several shares in the engineering sector, but it has also provided a further boost for other companies that have been on a rally in recent months.
Where uncertainty had previously been hanging over Balfour Beatty, Costain and Kier, shares have now been boosted.
So, which other companies and shares have been affected by the announcement?
FirstGroup (LSE: FGP) is one of the companies that has been buoyed by the recent news, especially as FirstGroup recently secured the rights to a joint venture on the West Coast Mainline that will include the HS2 line.
FirstGroup’s shares have risen 4% to 130p after a continuous rise over the past year.
Hargreaves Services (LSE: HSP) has also been positively impacted by the news of HS2’s progress. Hargreaves Services is the preferred supplier for many of the specialised earthworks set to take place between London and Birmingham for the new railway line.
Costain (LSE: COST) has had an order worth £1.1 billion on their books for the new high-speed railway line, along with more works with southern main, going some way to pick up the price of their shares.
Their shares previously dropped on the UK’s December 2019 election day after receiving their second profit warning in six months. Since then, Costain’s shares have rallied by 5%.
Keir (LSE: KIE) has received a boost since the HS2 decision was announced. Keir previously crashed to their lowest level in 20 years during 2019, however, there is £1.5 billion in their order book that has been counting on the approval of the HS2.
Balfour Beatty (LSE: BBY) secured a contract in September for the construction and delivery of the HS2’s Old Oak Common Station worth £1 billion, leading the recent confirmation of the project to be welcome news.
Go-Ahead Group (LSE: GOG) represents a further boost in transport shares beyond railways, growing an added 2% to 2,166p.
This rise has been due to the separate plans to funnel £5 billion into new buses, new bus routes and more frequent bus times.
Over two million passenger journeys are made using Go-Ahead buses each day, and the company is responsible for 11% of national services.
Overall, the news is looking good for the transport sector in the UK. Not only has the HS2 announcement caused a boost in engineering and transport shares, but a recent announcement of £170 million funding to electric buses, increased rural mobility and the trial of new Superbus services has no doubt positively impacted shares for the foreseeable future too.