Who’s at risk in Brexit? UK-exposed banks and utilities among Hong Kong stocks most vulnerable, analysts say

Hong Kong companies with large business exposure in the UK could be the most at risk if Britain votes to leave the European Union during Thursday’s referendum.

The biggest losers in the event that the “leave” vote carries the day would be financial stocks, including Hong Kong-listed HSBC Holdings and Standard Chartered Plc, according to First Shanghai Securities Chief Strategist Linus Yip.

“If the British vote for a Brexit, there may be an increase of barriers for British companies to participate in business activities in the euro zone, and the tax policies may be altogether changed,” Yip said, adding that the Hong Kong stock market is likely to be volatile in coming days.

Baring Asset Management’s Head of Multi Asset and Income Marino Valensise said: “Financial services represent a matter of profound importance to the UK economy…the consequences of Brexit would be serious. There is no precedent for accessing the EU market in services without paying a contribution to the Union and without complying with its regulations.”

Shares of HSBC and Standard Chartered have been under pressure in recent weeks as polls showed the leave camp gaining ground over their pro-EU counterparts. However, both shares rebounded sharply on Monday as the remain camp gained ground in the wake of last week’s murder of member of Parliament Jo Cox, a supporter of staying in the EU.

There is not much scope for these two stocks to climb up further given the poor environment for international banks this year, while a vote for Brexit will drag down their stock price again, Yip said.