Investors seeking sanctuary from recent market chaos should consider refuge in UK companies with high exposure to the soaring US dollar, experts say.
A traditional safe haven in times of turmoil, the dollar has risen by a fifth this year against a basket of major currencies, and last month hit an all-time high against sterling, with £1 worth less than $1.04, while one euro buys less than a dollar for the first time in 20 years.
Analysts say UK-based firms are well-placed to benefit from this. Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown said: ‘Most big companies listed in London earn most of their revenues and profits overseas.
Spending power: Last month the dollar hit an all-time high, with one pound worth less than $1.04, while one euro buys less than a dollar for the first time in 20 years
‘These will be worth more in sterling terms as a result of the slump in the pound.
‘So, expect shares in major stocks with big overseas earnings to lead the way in terms of resilience despite the weaker pound.’
On the FTSE 100, the biggest dollar earners in terms of revenues are equipment hire group Ashtead, educational publisher Pearson and security firm Ultra Electronics.
Pharmaceutical giants GlaxoSmithKline and AstraZeneca, consumer goods manufacturer Haleon and tobacco companies British American Tobacco and Imperial Brands also benefit via strong overseas sales.
And lots of companies declare their dividends in dollars. They include banks like HSBC and Standard Chartered, oil giants BP and Shell and miners such as Fresnillo, Glencore, Anglo American, Antofagasta and Rio Tinto.
Russ Mould, of broker AJ Bell, said: ‘A higher dollar buys more pounds and increases the value of the sterling dividend.’
The dollar’s strength has supported the FTSE 100, which has held up relatively well against other major indices, though it is still 8.3 per cent down this year.
But not all blue-chip companies have exposure to the dollar.
‘UK-focused retailers and supermarkets are set to feel the pressure,’ said Streeter. ‘
B&M has already been hit by the cost-of-living storm, with margins under pressure.
With the weaker pound, it’s also likely to be affected further by rising import costs.
‘Its shares have already fallen 52 per cent year-to-date.’
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