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Brexit Delayed: ETFs & Stocks to Gain

Sanghamitra Saha
Cisco beat on both earnings and revenues and also provided an upbeat outlook.

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: Top ETF Stories of March).

If a hard Brexit had been approved, Britain would lose the benefits of free trade within the EU. Since the EU has strong trade ties with Britain, the setting up of new trade barriers could hurt the country’s economy. Already 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 in focus.

Gold Mining

Per an article published on CNBC,Goldman cited thatNewmont Mining Corporation NEM has about 75% revenue exposure to the United Kingdom. The stock has about 14.1% exposure to iShares MSCI Global Gold Miners ETF 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 TETF will also come under the spotlight. Invesco Ltd. IVZ and IHS Markit Ltd. INFO have about a respective exposure of 19% and 12% to Britain. Needless to say, iShares MSCI Europe Financials 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 JETS in the near term.

Utilities

Goldman Sachs identified that electric utility PPL Corporation 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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PPL Corporation (PPL) : Free Stock Analysis Report
 
IHS Markit Ltd. (INFO) : Free Stock Analysis Report
 
Invesco Ltd. (IVZ) : Free Stock Analysis Report
 
Energy Select Sector SPDR Fund (XLE): ETF Research Reports
 
Invesco CurrencyShares British Pound Sterling Trust (FXB): ETF Research Reports
 
iShares MSCI Europe Financials ETF (EUFN): ETF Research Reports
 
U.S. Global Jets ETF (JETS): ETF Research Reports
 
iShares MSCI Global Gold Miners ETF (RING): ETF Research Reports
 
Newmont Mining Corporation (NEM) : Free Stock Analysis Report
 
John Hancock Multifactor Utilities ETF (JHMU): ETF Research Reports
 
ETF Industry Exposure & Financial Services ETF (TETF): ETF Research Reports
 
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