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Brexit Delayed: ETFs & Stocks to Gain


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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 CNBCin 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 FundXLE in focus.

Gold Mining

Per an article published on CNBC ,Goldman cited that Newmont 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 ETFRING 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 ETFTETF 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 ETFEUFN will gain the most.

Airlines

Airlines could see a significant fall in the "number of people flying in and out of the UK ."So, dark clouds should be over the airlines ETF U.S. Global Jets ETFJETS in the near term.

Utilities

Goldman Sachs identified that electric utility PPL CorporationPPL derives 30% sales from the Great Britain. This stock has more than 5% exposure to John Hancock Multi-Factor Utilities ETFJHMU .

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 TrustFXB 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.





This article appears in: Investing , ETFs
Referenced Symbols: PPL , INFO , IVZ , XLE , FXB




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