- Consumer demand could slow as U.K. exit splinters trade bloc
- Polish banks may see foreign-exchange losses from conversion
As investors sized up the shadow cast by Britain’s Brexit vote over emerging markets, everything from Turkish carmakers to Indian technology companies and a South African platinum producer came under the spotlight.
Top of the at-risk list following Friday’s referendum result are companies and industries with the strongest ties to the U.K. and Europe, where demand for consumer products may slow in the aftermath of the trading bloc’s fracture.
Here are some of the industries and stocks most exposed to Brexit based on their dependence on sales in Britain, as well as how much they will suffer from currency depreciation, according to analysts from JPMorgan Chase & Co. and other institutions.
South African Companies
Impala Platinum Holdings Ltd. derived 21 percent of its revenue from European sales in 2015, according to data compiled by Bloomberg. “Any threat to Western European platinum group metal demand poses a greater risk to Impala than its peers near term,” according to JPMorgan, which said the miner is least able to weather a drop in prices.
Discovery Ltd., owner of the nation’s biggest medical-insurance administrator, makes 22 percent of its sales in the U.K., according to UBS Group AG. The stock has fallen 14 percent this year, underperforming the Johannesburg benchmark. Britain is South Africa’s fourth-biggest export market.
Bank Zachodni WBK SA and Bank Pekao SA would face bigger losses from any government decision to force lenders to convert Swiss franc mortgages into the local currency as the zloty plummets in the wake of Brexit. There are $34 billion of mortgages denominated in francs. The zloty weakened 1.1 percent to 4.1557 per franc at 1:12 p.m. in Warsaw, extending Friday’s decline and heading to the lowest since January 2015 on a closing basis.
Infosys Ltd., Asia’s second-largest exporter of software services by market value, derived 24 percent of its revenue from Europe, according to 2015 data compiled by Bloomberg. Tata Consultancy Services Ltd., a global IT services company headquartered in Mumbai, India, received 28 percent of revenue from Europe last year, data compiled by Bloomberg show.
The impact of postponed software spending in Europe before Brexit will already be reflected in second-quarter earnings reported in July, according to Anurag Rana, senior industry analyst with Bloomberg Intelligence in New York. “With this vote, it is possible that there could be further cuts in tech spending for this year and next,” he said.
Automaker Ford Otomotiv Sanayi AS generates about 23 percent of its sales volume from the U.K., while for Tofas Turk Otomobil Fabrikas AS, that figure is 7 percent, according to Istanbul-based Burgan Yatirim Menkul Degerler. Britain is Turkey’s second-biggest destination of exports.
Arcelik AS, which exports appliances, gets about 10 to 15 percent of revenue from the U.K., according to Burgan Yatirim. Koc Holding AS, which owns stakes in all three companies, slid 5.3 percent on Friday. The stock extended declines, falling a further 1.4 percent today.
Wizz Air Holdings Plc, Eastern Europe’s biggest discount airline, was downgraded by HSBC Holdings Plc and Goldman Sachs Group Inc. analysts. The Hungarian airline earns 20 percent of its revenue in the U.K. and is most exposed to the fallout of Brexit among carriers in central and eastern Europe, the Middle East and Africa, according to Goldman Sachs’ Moscow-based analyst Daniil Fedorov. The stock lost 29 percent in London trading Friday and Monday, its biggest two-day loss on record.
Cemex SAB, the largest cement maker in the Americas, relied on the U.K. for almost 9 percent of its sales last quarter and 22 percent from Europe. Mexichem SAB, which produces chemicals that are used to make everything from pipes to children’s toys, gets 37 percent of sales from Europe. Nemak SAB, a Mexican auto-parts maker partly owned by Ford Motor Co., got about a third of its revenue from Europe last quarter. Embraer SA, the Brazilian planemaker, got 13 percent of sales from the continent.
YTL Power International Berhad generates 26 percent of its revenue in the U.K., according to UBS. Twelve analysts have a hold recommendation on the stock, while three say investors should buy the shares and one suggest selling it, according to forecasts compiled by Bloomberg.