Wondering what to do while waiting for sterling to crash? Goldman has some ideas.
They’ve made two baskets of UK stocks — one international and one domestic. The first is made up of stocks with high exposure to foreign-generated revenue and which have, to date, been sensitive to movements in the pound. The second is made up of UK economy-sensitive stocks.
Here’s what they say:
While we still favour the UK market on a relative basis, many investors are becoming increasingly worried about a further fall in sterling, given concerns over a possible hung parliament and the level of the fiscal deficit. We have two baskets to help position for further sterling weakness. We recommend going long UK companies with international exposure that tend to exhibit negative correlation with the pound and short UK domestic companies that are generally positively correlated with the pound.
You can look up the two baskets on Bloomberg, if you have access to Goldman stuff. GSSTUKIE is the international one, and GSSTUKDE is the domestic.
Or you can just have a look at the below. Click to enlarge:
Related links:
The Great British Peso – FT Alphaville
Scylla and Charybdis, sterling edition – FT Alphaville
‘Talk of a GBP crisis sounds like hysterical claptrap’ - FT Alphaville