UK Spotlight, ABF, China Retail Sales, ...

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UK Spotlight, ABF, China Retail Sales, ...

rivative

impacts to GBP would be impactful given most UK retailers are majority USD-sourced

• Leisure: Estelle and Karan see policy risk as twofold: potential welfare restraint could squeeze disposable incomes, and any

rise in gilt yields could tighten financial conditions. Hotels are seen as the most cyclical, followed by UK pubs, while gaming

is relatively more defensive given lower average ticket spend. On this basis, they see Whitbread, UK Pubs, and Evoke as most

at risk, followed by TUI, Entain and Flutter.

• Airlines: Harry thinks if a moderation of fiscal tightening were to be pursued, it would be supportive for UK leisure demand,

benefitting Airlines and Travel Retailers with high UK exposure (Jet2 c100%, WHSmith and easyJet c50%). UK outbound

short haul demand has been softer in recent months due to the impact from the Middle East, combined with an oversupplied

market. A depreciation in GBP would provide a translation benefit to names with non‑sterling profit pools (SSP, WHSmith),

while for IAG it would be negative for BA profit, but net group exposure is dependent on EUR conversion. easyJet and Jet2

would be negatively impacted given their large USD cost bases, although are protected by FX hedging in place.

The note (here) has a lot more details and a very helpful table with stock-specific comments for stocks with notable UK exposure.

***UK VOICE CALL*** Note we do have a UK Voice call to run through the results this Friday June 19th at 7h30 UK /

8h30 CET featuring Allan Monks, Francis Diamond, our UK rates sales team and Positioning Intelligence - hosted by our

excellent UK Spec Sales Ben Watson. Registration links here (for out of scope and high touch institutional clients only).