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Oil, gas and mining stocks outshine housebuilders after 'Brexit' - broker

Oil & gas and mining stocks have survived the 'Brexit' fallout largely unscathed
Gold bars in front of a Canadian flag
Canadian-listed gold miners have generally done better than their London peers since the EU vote

Oil & gas and mining stocks have spurted since ‘Brexit’, but housing stocks have crumbled, according to a report by broker Peel Hunt.

Chariot Oil & Gas Limited (LON:CHAR), President Energy PLC (LON:PPC) and Shanta Gold Limited (LON:SHG) were the three top shares respectively in the broker’s 40 best-performing stocks since the June vote.

But industrial walkie-talkie supplier Sepura Plc (LON:SEPU) was the biggest casualty following a warning earlier this month that it may breach its bank covenants, although its shares have picked up since.

Housing stocks have also subsided since the referendum, with Countrywide (LON:CWD) the sector’s biggest casualty in the broker’s 40 worst-performing stocks.

Others included respectively Foxtons Group PLC (LON:FOXT), McCarthy & Stone PLC (LON:MCS), Derwent London Plc (LON:DLN), Crest Nicholson Holdings PLC (LON:CRST), Berkeley Group Holdings PLC (LON:BKG), Taylor Wimpey plc (LON:TW., Capital & Counties Properties PLC (LON:CAPC), Bovis Homes Group plc (LON:BVS) and British Land Company PLC (LON:BLND).

Peel Hunt said oil & gas and mining equities have emerged largely unscathed from the referendum outcome.

The broker said the most influential factor driving sentiment in both sectors remains the balance between global supply and demand and, in the short term in oil, the forthcoming Opec talks in Algeria.

It added: “The companies most leveraged to a recovering oil price are perversely those that have the most debt.

“Of the mid-caps we would flag Premier Oil PLC (LON:PMO), EnQuest PLC (LON:ENQ), Nostrum Oil & Gas PLC (LON:NOG), Tullow Oil plc (LON:TLW) and Seplat Petroleum Development Company PLC (LON:SEPL).

“Looking further down the market-cap scale, E&P companies that could post strong absolute returns in a rising oil price include Faroe Petroleum plc (LON:FPM), Ithaca Energy Inc (LON:IAE) and Eland Oil & Gas PLC (LON:ELA).”

Peel Hunt said the performance of Canadian-listed gold mining stocks since the run in the gold price and the 'Brexit' result had generally been stronger than in London.

"This performance gap should close as the London names have the benefit of being priced in a weakening currency (sterling) while retaining the dollar-denominated revenues," the broker said.

Property share prices fell dramatically following the ‘Brexit’ vote, with the sector falling 22% by June 27.

Peel Hunt said demand for real estate remained strong despite the initial price falls and the vote result did not appear to have significantly affected tenant demand.

But it added: “We will monitor this closely, in particularly in London where we believe the impact of ‘Brexit’ will be felt the strongest.”

Sepura shares have recovered somewhat since a steep fall immediately after its profit warning as broker Liberum Capital said the problems made it vulnerable to a potential takeover.

On Monday, they were a penny, or 6.1%, higher at 17.5p.

 

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