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

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 PLC1 920,00 GBX-2,49
Barclays PLC97,42 GBX-3,10
Bayerische Motoren Werke AG63,74 EUR-1,65
HSBC Holdings PLC304,00 GBX-2,19
Lloyds Banking Group PLC25,64 GBX-2,35
Morrison (Wm) Supermarkets PLC173,66 GBX0,94
Reckitt Benckiser Group PLC7 430,00 GBX0,16
Rolls-Royce Holdings PLC180,15 GBX-5,13
Sainsbury (J) PLC195,10 GBX2,07
Tesco PLC218,08 GBX1,34
The Royal Bank of Scotland Group PLC96,88 GBX-3,17
Unilever PLC4 737,12 GBX-1,72

Om forfatteren

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

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