The winners and losers of Brexit

It’s been a week since Britain’s vote to leave the European Union but still there’s no clear understanding for how the decision will affect Canadians going forward. By Friday, post-Brexit – the cute-but-not-so-cute-now nickname for the referendum – Canada’s dollar had fallen US1.37 cents to US76.93 cents, and the Toronto Stock Exchange’s S&P/TSX index fell 239.50 points. But despite the large-scale recoil by the global economy, it’s not all losers across the board.

A week on, Yahoo Canada Finance takes a look at the big winners and losers so far:

The Winners

Gold

The precious metal, often a haven for safety-seeking investors – flew past US$1,300 an ounce following the news, putting it at its highest level in two years. It bodes well for Canadian gold miners like Barrick Gold, Goldcorp and Franco-Nevada whose shares all gained at least 4 per cent post-Brexit. In fact gold miners accounted for 12 of the index’s 15 most influential gains, according to Reuters. The TSX’s materials group, which also includes precious and base metals miners as well as fertilizer companies, grew 3.2 per cent on the news.

China

While an unstable economy doesn’t profit many in the G20, China has been pegged as a potential benefactor as both Britain and the E.U. look to cash-rich Chinese investors.
“One of the benefits China can gain from ‘Brexit’ is a stronger and closer economic relationship with the U.K. and even with the EU,” Zhang Lihua, director of the Center for China Europe Relations at Tsinghua University in Beijing told CTV. “Both the U.K. and the EU need that kind of co-operation with China under the current circumstances.”
Europe continues to be one of China’s biggest trading partners.

The Losers

Canada’s real estate market

A report by BMO Nesbitt Burns pointed to a continuation of the country’s real estate market woes as a result of uncertainty in the world economy spurring the Bank of Canada to keep interest rates low. “In that event, the Fed will remain on ice even longer and Canadian rates will again probe all-time lows, keeping mortgage rates at an extremely low ebb and thus further fanning the flames in the domestic housing market,” BMO chief economist Douglas Porter and senior economist Robert Kavcic wrote.

The Comprehensive European Trade Agreement

One of the biggest casualties of the Brexit is apt to be global trades. “Canada may be the one country paying the largest price as the Comprehensive European Trade Agreement (CETA) is still under negotiation and will not be ratified any time soon,” wrote Sylvain Charlebois, dean of the faculty of management and professor in food distribution and policy at Dalhousie University in an email to Yahoo Canada Finance. “With so much uncertainty in agricultural policies CETA is undoubtedly on life support, at best.”
With the U.K. leaving the E.U., the countries will need to re-negotiate common agricultural policies potentially putting CETA on the back burner for the time being.

Ontario and Newfoundland

Despite the fact Canada only sends three per cent of its exports to the U.K. – about $16 billion last year according to stats Canada – two provinces in particular can expect a hit in this realm. Ontario and Newfoundland export five and seven per cent respectively to the country, and are particularly more likely to lose out given a potentially weaker export demand from the U.K. Ontario’s auto sector could also take a hit with analysts already downgrading auto parts manufacturers Magna International Inc., Linamar Corporation, Exco Technologies Ltd and Martinrea International Inc.