Describing the prospect of a Conservative minority government or a hung parliament as “the key risk scenario” in a research note published on Tuesday, the Deutsche Bank team warned that this outcome could lead to the increased risk of a hard-Brexit and higher macro uncertainty.

“Our macro analysts expect the GBP to sell off sharply and Gilts [10-year U.K. government bonds] to fall to 0.9% in this scenario (from the current 1.05%). Defensive exporters with little domestic exposure but high GBP-sensitivity are likely to outperform, while domestic consumer plays are likely to be hit by the increase in political uncertainty,” said the note, with its authors going on to suggest mining, healthcare and energy companies, such as BP, Shell, Rio Tinto and Shire could be winners.

Turning to likely potential losers, the analysts pointed to domestically-oriented consumer retail names such as Kingfisher, Next, Dufry and M&S as well as certain property plays such as Hammerson and INTU.

“Retailers would likely underperform as a consequence of FX-driven inflation, higher cost of goods sold, uncertainty about the legislative agenda, and greater risks of hard Brexit…Any weakness in the retail sector should also likely weigh on retail-focused real estate,” predicted the analysts, before turning to the financial sector and singling out Lloyds, RBS and Aldermore as names upon which to keep a wary eye.

“Increased political uncertainty due to a close election outcome would be a negative for domestic banks, in particular relative to their UK-based, globally-focused peers (HSBC, Standard Chartered),” according to the research.

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