Brexit Delayed: ETFs & Stocks To Gain
Zacks Investment Research | Apr 15, 2019 02:00AM ET
The Brexit deadline has been put off till Oct 31. This was because ofhuge internal differences in the British parliament asmembers turned down prime minister Theresa May’s EU withdrawal plea for the third time on Mar 29, the day Britain was scheduled to leave the EU (read: small businesses have pleaded with politicians to come up with an agreement and avoid making no moves in the next six months.
As soon as Britain cuts the cord with the EU, its importance as a corporate transit to the rest of Europe would be lost, noted CNBC in 2016. Many global institutions may even want to shift their base from London to the German capital Frankfurt — another hot spot in the EU.
Against this backdrop, this delay probably has offered some temporary relief to the following ETFs and stocks.
ETFs & Stocks in Focus
Energy
FactSet senior earnings analyst John Butters indicated that U.S. energy sector is pretty exposed to Brexit as theindustry has the highest revenue exposure (6.4%) to the United Kingdom. This puts energy fund Energy Select Sector SPDR Fund XLE (NYSE:XLE) in focus.
Gold Mining
Per an article published on CNBC ,Goldman cited thatNewmont Mining Corporation (NYSE:NEM) has about 75% revenue exposure to the United Kingdom. The stock has about 14.1% exposure to iShares MSCI Global Gold Miners ETF (NYSE:GDX) (OL:RING) where Newmont is the second holding.
Financials
Britain acts as a financial powerhouse of Europe. While the Europe financials stocks and ETFs will bear the direct brunts, other financial ETFs like ETF Industry Exposure & Financial Services ETF EUFN will gain the most.
Airlines
Airlines could see a significant fall in the “number of people flyingin and out of the UK .”So, dark clouds should be over the airlines ETFU.S. Global Jets ETF (KL:JETS) in the near term.
Utilities
Goldman Sachs (NYSE:GS) identified that electric utility PPL Corporation (NYSE:PPL) derives 30% sales from the Great Britain. This stock has more than 5% exposure to John Hancock Multi-Factor Utilities ETF JHMU .
Pound
British pound dived to a 31-year low when Brexit won the referendum in June 2016. Now, with six more months of lifeline, Invesco CurrencyShares British Pound Sterling Trust FXB should fare better.
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