Brexit: Worst-Case Scenario Hits Bank and Supermarket Stocks

A "disorderly" no-deal Brexit would hit banks, autos, supermarkets and aerospace, say Morningstar equity analysts

Alex Morozov, CFA 12.12.2018 | 13:41
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Betting on the outcomes of political debates isn't our forte, and the upcoming UK House of Commons vote that could determine the direction of the world's fifth largest economy for the foreseeable future is no exception.

As bottom-up, fundamental, long-term-focused analysts, however, we do want to ensure our industry analysis and models adequately account for the macroeconomic and political risks. In this research, we use a worst-case scenario of a disorderly no-deal Brexit to stress test models for our companies with the greatest exposure to the UK economy and Brexit.

While we identify a number of firms that could face long-term adverse developments following a no-deal Brexit, namely in the automotive space, we also see most disruptions as short term in nature and thus unlikely to materially alter our long-term views. We believe we adequately account for the heightened risk via our uncertainty ratings and see a number of investment opportunities with the market getting jittery as we get closer to the Brexit Day.

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Verdipapirer nevnt i artikkel

Navn på verdipapirPrisEndring (%)Morningstar Rating
Associated British Foods PLC2 050,00 GBX1,38Rating
Barclays PLC179,72 GBX0,49Rating
Bayerische Motoren Werke AG81,20 EUR-0,36Rating
HSBC Holdings PLC402,90 GBX0,62Rating
Lloyds Banking Group PLC45,91 GBX-2,96Rating
Morrison (Wm) Supermarkets PLC272,00 GBX0,26Rating
NatWest Group PLC211,00 GBX0,29Rating
Reckitt Benckiser Group PLC5 598,00 GBX-1,15Rating
Rolls-Royce Holdings PLC110,68 GBX5,87Rating
Sainsbury (J) PLC288,10 GBX-0,07Rating
Tesco PLC231,85 GBX-0,64Rating
Unilever PLC4 100,00 GBX-0,59Rating

Om forfatteren

Alex Morozov, CFA  Alex Morozov is the director of the health-care team at Morningstar.

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