Housebuilder and UK bank share prices are among the most at risk stocks in the UK should Britons vote to leave the European Union in June, analysts have warned.
Housebuilder and UK bank share prices are among the most at risk stocks in the UK should Britons vote to leave the European Union in June, analysts have warned.
Caroline Simmons, deputy head of the UK investment office at UBS Wealth Management, said while fears around Brexit have already been priced in to the market in the form of a weaker pound, the impact of currency headwinds may have a knock-on effect on UK equities.
She said: “Since housing demand is driven strongly by consumer sentiment and by credit conditions housebuilders, which have 100% UK exposure, would suffer if Brexit arose.
“Consumer sentiment would deteriorate, and the banks’ funding costs would increase, leading to a tightening of credit conditions.”
Additionally she warned that the UK’s banking sector is one of the most exposed to changes in the UK’s relationship with the EU.
She said: “A widening of UK credit spreads or a change in the UK sovereign credit rating could lead to higher funding costs for the UK banks which would lower margins and profitability.
“Domestic and retail banks have a high exposure to the UK through corporate and retail lending – therefore a decline in confidence and sentiment may lead to lower transactions and demand for banking services.”
Stuart Dyer, chief investment officer at Rplan, added: “No doubt the volatility in January and Brexit vote later this year are factors in making investors more cautious this year, although there are other issues around the world that need to be considered.”
