Burberry (BURBY) tumbled in early trading, and has been volatile but like other British luxury goods exporters - including the likes of exclusive auto maker Aston Martin, which today said it plans to GBP200 million ($274 million) on a new factory in Wales - might actually benefit from a weak pound as this may improve its earnings from Asian markets.
But within the U.K., as analysts at investment bank Jefferies predicted, general retail can expected a double whammy of weakened U.K. consumer sentiment and propensity to spend combined with the "extreme sourcing pressures" implied by a devaluing pound.
Jefferies suggested that earnings would be hit harder at some retailers than others, with a mid-range level such as food and clothing chain Marks & Spencer and DFS Furniture taking a hit of between 15% and 30% of earnings before interest and taxes. In food retail, Jefferies suggested Tesco (TSCO) - Get Report should benefit while J. Sainsbury (JSAIY) could be hit by its recent agreement to buy particularly-vulnerable non-food catalog retailer Argos.
Sports goods retailer Sports Direct International (SDIPF) gave an indication of the market outlook this afternoon with an announcement in response to the referendum result. It said the "associated market volatility and in particular material changes to sterling/dollar exchange rates and the lack of transparency as to those rates in the short to medium term" could impact purchases for which the company is not hedged for the FY17 period and beyond." Sports Direct's shares were down nearly 16% in early afternoon trading.
The Jefferies industrial team meanwhile picked the packaging sector as one of those most likely to be hit by the unexpected vote to leave Europe. The analysts said the vote would be a negative catalyst as it would impact both industrial production and consumer confidence, both of which would impact demand.
Of these RPC Group (RPCGF) and DS Smith (DITHF) , two of the U.K. largest packaging companies, which both report in British pounds, would see the greatest near-term impact, while Irish rival Smurfit Kappa (SMFTF) and Anglo-South African Mondi (MONDY) , which report in euro would still have some negative impact.
However, the analysts also said the uncertainty creates opportunity, and an exit would create opportunity for investors to build exposure to high-quality packaging operators and appealing long-term valuations.
And it is not all bad news. Companies which do their business in dollars, such as tech heavyweight ARM Holdings, (ARMH) , (ARMHF) , which sells its semiconductors to Apple (AAPL) - Get Report and much of the mobile technology sector, sees only value from the fall of the pound, working to a rule of thumb that a 10% weakening in sterling to the dollar equals a 15% boost in earnings per share.
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According to UBS analysts, the U.K. technology sector in general has both limited U.K. sales exposure and generates a high proportion of U.S. dollar revenue and should prove relatively protected from market turmoil. It may even benefit from short term weakness in the pound. UBS mentioned longer term issues, however, such as the ease with which the likes of ARM can recruit talent from other European countries to work at its Cambridge, England headquarters, and crucially for many businesses in and around the tech hubs of Britain's research universities, the availability of R&D grants for the education sector. The U.K. has been a major recipient of research money from various Brussels education, science and technology funds.
UBS suggested thyat software businesses with high U.K. exposures might be hurt by Brexit even as they benefited from foreign exchange weakness. Newbury England-based information technology consultancy and software group Micro Focus International (MCFUF) , for instance, has among the highest U.S. sales exposures in the sector - with 58% of its business in the U.S.. So it would be among the biggest beneficiaries from a stronger dollar, according to UBS.
But more traditional industries such as construction face a torrid time, if as some predict, Britain falls into recession. While the Bank of England might be forced to reduce interest rates or restart quantitative easing to keep the economy from going into tailspin, demand for new properties, especially at London's high pre-referendum prices, may not be as strong as it once was.