Oh no! House prices may go down! We’re all doomed! The emerging consensus among those paid to guess is that our Brave New World will chop between 2 and 5 per cent off next year. This has translated into a wipeout of shares in housebuilders. Taylor Wimpey, the biggest volume builder, lost a third in the week since the big day.

This reflects the triumph of panic over potential. BB (Before Brexit) the sector did look overvalued, but not by 50 per cent. Redrow, among the best-run builders, was even moved to issue a reverse profit warning, to report how the buyers were queuing up outside its show homes.

The queues may be shorter this weekend, but if the buyers disappear, the builders know what to do. It is only eight years since Taylor Wimpey’s near-death experience after the banking crisis, and in the event of a post-Brexit apocalypse, they will stop buying land, build fewer houses and run the businesses for cash

This protects the dividend, but does nothing to tackle the UK’s housing shortage, becauseĀ  this is something the companies are not really designed to do. Smaller builders, ruined in the last recession, lack the capacity to cope with today’s complexities of planning and compliance. This suits the leaders, who can control their rates of construction to ensure the continuing shortage of supply. It’s another urgent problem for the new government. Shelving vanity projects like HS2 and Hinkley Point would be a start.

So the big housebuilders will ensure they can keep paying dividends, albeit in the rather idiosyncratic manner they seem to prefer. Taylor Wimpey has paid out 7.4 per cent of its current market value in the last year, but only a small fraction as a “maintenance dividend”, while Persimmon prefers “capital repayments”.

Liberum Capital reckons a 3 per cent fall in house prices would take 18 per cent off earnings, or rather less than the post-Brexit slump in share prices. A 3 per cent fall would be welcomed by many, following the 5.1 per cent increase in the last 12 months. Meanwhile, Goldman Sachs is bearish on the builders, and we all know what a fine contra-indicator the bank’s published views are. At today’s prices, their shares look a better bet than their products.

Oh dear, another failing LSE merger

Today the shareholders in the London Stock Exchange must vote to decide whether, despite a history of failed attempts, they should merge with someone else. As usual with the LSE, the commitment of the management may not be enough. Despite protestations all round, the Brexit vote destroys the dynamics of the “merger” with Deutsche Borse.

Like the previous failed deals, this one was already far from satisfactory for the LSE shareholders, who know there is no such thing as a merger. The CEO of the LSE is already running for the exit, on rather better terms than those being offered to the shareholders. In return for power, his newish counterpart at Deutsche, an ambitious former Goldman Sachs executive (them again) allowed the company to be based in London.

The German authorities are revolted by the thought of their market being run from a country outside the EU, rather as trading in the euro in London infuriates its members. Like Britain’s relationship with the 27 remainders, this deal should be best shelved, at least until everyone has calmed down.

On Borrowed time

Simon Borrows took the helm at 3i in 2012 when it was just out of intensive care. The previous management had been forced into that rare humiliation for the board of an investment trust – a rescue rights issue. Shares in what should have been a relatively low-risk investment had fallen into the 90 per cent club.

It has been a long haul back, but this week the shares jumped to 543p, close to their eight year high, after 3i revealed enthusiastic buyers for its stake in Action, a Dutch retailer. The subsequent revaluation has added 11 per cent to net asset value, to 538p on Cazenove’s calculation. It is rare for an investment company to stand at a premium, but as long as Mr Borrows stays in charge, it is hardly surprising that Cazenove reckon they are cheap.

This is my FT column from Saturday

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