Brexit: Winners and Losers of the falling pound

The United Kingdom's unexpected decision to leave the European Union in last week's historic referendum has changed the social, political and economic situation of Britain, and much of Europe for the foreseeable future.

First and foremost, the decrease in the value of the pound has had severe ramifications for many, but could be cause for celebration amongst various groups.

Who were likely to be the winners and losers from Brexit from a market perspective?

WINNERS

Domestic tourism
Barcelona's loss is Blackpool's gain. As many Brits will now be put off the idea of heading to sunnier European shores due to the possibility of having hundreds of euros less to spend, they may stay at home on holiday, boosting hotels and restaurants in Britain. Those from outside the UK will be also be more inclined to head to London or the Lake District for their summer trips.

UK exporters
Those selling their wares abroad stood to gain even as sterling got trounced. Recently, some central banks have cut interest rates to even below 0% in an attempt to weaken their currencies, although the United States has warned againt this as it could trigger a currency war.

Long-term investors
The changing patterns of supply and demand in the investment market combined with a high level of uncertainty will of course lead to volatility in the short term. However, retail funds were likely to come off badly in the short-term should demand for redemtions build-up rapidly, but many foreign buyers and high net worth individuals had the ability to wait out the storm, which should allow them to be more competitive in pricing, UBS said in a research report.

FTSE 100
The FTSE 250 index has borne the majority of selling, due to the more domestic-focused nature of its companies. The FTSE 100 however has more of a global reach, with its constituents benefitting more from overseas revenue streams.

Property market
It's almost certain that interest rates will continue to be low for a long time which will help to steady the property market, UBS said in the same report, unless the most adverse scenarios come to fruition. This may benefit some European markets, but yields for core assets are already at or below peak levels in most major cities. If yields in Europe do move in further, or even maintain their current level, "it is hard to see UK yields moving out significantly above their current level," according to the Swiss broker.

LOSERS

The economy
Although an increase in exports may well help to bridge the current trade deficit, the UK will experience a great loss in confidence from international investors, possibly restraining their investments in the UK. Also, it may be harder than one might think for the UK to try and negotiate trade deals on its own with the likes of China and Japan, JP Morgan pointed out to clients in a research report.

Food
Prices are expected to increase as the pound weakens, due to the large proportion of foodstuffs sourced from the European Union.

Banks
Shares of many big British banks have taken a severe beating given their exposure to the domestic UK economy and question marks around their ability to continue exporting their services to the Continent. Barclays shares are now down 42% year to date, while RBS has shed 48%. Quite a few challenger banks, in particular, are seen as leveraged bets on the housing boom.

London
As has been revealed this week already, many major institutions and companies are threatening to move business from the largest financial centre in Europe. The European Banking Authority is reportedly set to move to Paris or Frankfurt, and on Wednesday Vodafone said their global headquarters may be moved to the continent. The vote to leave is likely to hit financial and business services output and job creation across the UK, and there is now a strong possibility of many jobs being moved away from London.

UK investment markets
"Leveraged investors on floating interest rates are in theory exposed to a spike in rates, however at the time of writing there has not been a run on UK gilt yield," according to UBS. London is likely to see the most severe impact in the short term due to its dependence on foreign capital, and combined with the aforementioned pressure on retail funds, the investment market is likely to take a big hit.

Motorists
With oil being priced in US dollars, and with some experts predicting parity between the pound and the dollar by the end of 2016, the price of petrol will no doubt see a significant increase.

Small businesses
Uncertainty and volatility are not a good combination for those with smaller profit margins, and it could lead to many small businesses having to reanalayse their situations.

Homebuilders
In the very short-term, many uncertain buyers will have been scared off from property deals after Brexit and by the fall in the value pound, leading to a subsequent slowdown in house price gains. Shares in the sector have dropped by approximately two-fifths.