Stockbroker Liberum expects small and mid cap banks to bear the brunt of the sell-off when London markets open at 8am.
Under assumptions of a 12.5% decline in the FTSE 250 today, specialist lenders Shawbrook (SHAW) could fall 38.4%, Aldermore (ALD) could retreat 31.5% and consumer lender International Personal Finance (IPF) could dip 29.1%.
Stock futures for the FTSE 100 point to an 8% drop in the blue chip index.
Liberum’s estimates are made by calculating the historical sensitivity of a stock to the general market.
Other losers may include housebuilder Redrow (RDW), which Liberum says could fall as much as 25%.
Stocks insulated from a market slump could include those in the technology, chemicals, pharmaceutical and non-discretionary retail sectors, Liberum adds.
Many of the sectors have defensive currency positions, Liberum argues, with revenues generated largely overseas which could mitigate the impact of a weaker currency after sterling dropped 13 cents against the dollar overnight.
Graphics chip design specialist Imagination Technologies (IMG) could face significant earnings upgrades because 60% of its costs are in sterling and its revenue is largely earned in dollars.
Liberum says a 1% decline in the sterling-dollar exchange rate leads to a 2% earnings upgrade at Imagination.
Chip designer ARM (ARM) makes 95% of its sales in dollars, while 50% of its costs are in sterling. A 1% fall in the sterling-dollar exchange rate leads to a 1.5% earnings upgrade at the tech firm, Liberum’s analysts say.
Chemicals supplier Victrex (VCT) generates 60% of its revenue in dollars, with a further 35% in euros while all of its costs are in sterling.
A 1% decline in the trade-weighted sterling basket increases Victrex’s earnings 2%, according to the investment bank’s analysis.
Luxury shoe retailer Jimmy Choo (CHOO) could also be a winner. It generates 55% of its revenue in dollars while 85% of costs are paid out in euros or sterling, Liberum calculates.
