U.S. bank stocks and multinationals could get hurt if Britain votes to quit the European Union, equity strategists say. Fred Katayama reports.
Investors are wary ahead of the key vote Thursday over whether Britain quits the European Union. Should the anti-EU forces win, U.S. bank stocks could get slammed. Analysts say a British exit would weaken activity in the capital markets. Keefe, Bruyette and Woods says that would most hurt JPMorgan Chase, whose CEO has threatened massive layoffs in the UK, and Goldman Sachs, which gets nearly a fifth of its revenue from its British operations. Wells Fargo Funds Management's John Manley: SOUNDBITE: JOHN MANLEY, CHIEF EQUITY STRATEGIST, WELLS FARGO FUNDS MANAGEMENT, (ENGLISH) SAYING: "I think the U.S. has used London as a springboard to cover the Continent. That's not going to work. That means more expense." An exit from the EU could also trigger a spike in the dollar against European currencies. Recon Capital Partners' Kevin Kelly: SOUNDBITE: KEVIN KELLY, CHIEF INVESTMENT OFFICER, RECON CAPITAL, (ENGLISH) SAYING: "One of the biggest consequences that could affect the U.S. economy over here is the dollar would get significantly stronger against the pound, and that is the least that the multinational corporations want to deal with." So Kelly says U.S. large cap stocks could be vulnerable. But some stock watchers say investors shoudn't make any moves ahead of the referendum. Jeff Layman of BKD Wealth Advisors: SOUNDBITE: JEFF LAYMAN, CHIEF INVESTMENT OFFICER, BKD WEALTH ADVISORS, (ENGLISH) SAYING: "I think at this point, it doesn't make sense to exit stocks. There's still a pretty fair chance that Britain remains." If that happens, strategists say, expect a relief rally.