Brexit investing: Strategist gives his sectors for 'leave' and 'stay' outcomes

A Britain Stronger In Europe campaigner (L) stands next to a Vote Leave campaigner outside Parsons Green Tube station in London June 20, 2016.
Kevin Coombs | Reuters
A Britain Stronger In Europe campaigner (L) stands next to a Vote Leave campaigner outside Parsons Green Tube station in London June 20, 2016.

You can count the number of hours until the big U.K. referendum on whether the nation chooses to stay in the European Union — or leave its ranks. Investors and traders have been and are still jockeying around one of the biggest global market events of the year, and many Wall Street experts are weighing in on how to prepare for the anticipated volatility.

The opinions vary, but one strategist thinks that the trend is your friend, no matter what the outcome of the so-called Brexit vote that takes place Thursday. Many recent polling numbers have the decision as a virtual coin toss, with both sides on equal footing.

Brian Belski, chief investment strategist at BMO Capital Markets, is looking toward the outcome of the vote and deciding which sectors or industry groups in the U.S. stock market could benefit.

If U.K. voters choose to remain in the European Union, Belski believes investors will look more toward those industries that benefit the most in a rising economy, and they'll look less at the ones that are more dividend-oriented, or defensive in nature.

Stay picks

Among the sectors Belski likes in a stay scenario are:

  • Financials.
  • Consumer discretionary.
  • Technology.

He said he would also be a buyer of select industrial names.

Leave picks

Conversely, if the vote ends up favoring those who are campaigning for the U.K. to leave the EU, look for less economically sensitive, as well as higher dividend paying parts of the market to do better, Belski said. On that front, he's looking at:

  • Utilities.
  • Telecom services.
  • Real estate investment trusts (REITs).

Each of those groups is known for its above-average dividend yields.

'Don't invest for months here, you invest for years'

In an interview Tuesday on CNBC's "Worldwide Exchange," Belski noted that he's not necessarily advocating the more tactical, or shorter-term nature of picking industry groups around specific events, such as the Brexit vote.

"The reactive, emotional trader has made binary decisions," he said. "You don't invest for months here, you invest for years."

In a note to clients earlier this month, Belski and his team made the case that the Brexit vote is important, but won't be the key market issue this year. The policies that the U.S. Federal Reserve will adopt in terms of interest rates remain more important, they said. Traders and investors may get skittish about any perceived missteps from the nation's central bank.

"We continue to believe investors are positioned for negativity in terms of earnings and economic growth," said Belski.

After the big Brexit vote this week, the market will get a fresh chance to evaluate the longer-term prospects for stocks. With another earnings season kicking off next month, as well as more economic data and another Fed interest rate meeting, there will be no shortage of catalysts for traders.