Home / News / Weekly Roundup June 20 – June 24 2016: Brexit Vote Fallout Reaches Defense Stocks & more

Weekly Roundup June 20 – June 24 2016: Brexit Vote Fallout Reaches Defense Stocks & more

June 20 – June 24 2016

A Note From Our President & Founder Jim Garrettson

 Naval-Operations

Thursday’s highly-anticipated and historic “Brexit” vote in the U.K. led investors all over the world and so many other interested stakeholders to speculate over the implications of Britain’s potential departure from the European Union.

Now that the British public has decided to proceed with a Brexit, investors are looking for safe haven investments to protect against volatile markets that have swung all throughout June on speculation over how the U.K. referendum would go.

Government and defense contracting sector stocks have also felt the London-driven headwinds also despite the unique nature and drivers of this industry much discussed in this space and highlighted by many analysts that view GovCon as a relatively insulated arena compared to other arenas.

As of this publication’s send, the GovCon Index had fallen 2.4 percent in intraday trade as of 2 p.m. Friday and was on pace to register a weekly decline of nearly a full percent.

By comparison, the S&P 500 composite index that contains 11 GCI stocks plunged 2.9 percent as of mid-afternoon to show a 1-percent decline from the Friday close.

The GCI rose 3.2 percent over June’s first seven days as polls leaned toward the U.K. staying in the EU, then registered a-2.6 percent fall leading into the start of this week when those same surveys indicated the British public leaning slightly toward a departure.

Over this week, the GCI held flat over three days on investor uncertainty than rose nearly one-half percent Thursday on confidence the U.K. would not go ahead with the Brexit before the Friday plunge along with every major U.S. and European stock benchmark.

Two GovCon Index stocks emerged as clear outliers over all the rest that were dragged into deep red in the form of Lockheed Martin and Raytheon, respectively up 64 and 67 cents after mid-morning spikes to 1-percent gains for each.

BAE Systems PLC suffered the brunt of post-Brexit trade as its shares in the U.S. over-the-counter market plunged 12.73 percent as of mid-afternoon Friday, while the British defense contractor’s stock on the London exchange closed down 4.6 percent.

Some short-term effects from the Brexit are clear but the long-term implications on GovCon will become clearer as U.S.-based contractors with significant global footprints determine what the move means for their operations across the Atlantic Ocean as investors get another gauge to determine the industry’s financial health.

THE WEEK’S OTHER TOP 10 GOVCON STORIES

Mike Lawrie to Step Down as CSRA Board Chair in August Ahead of CSC-HPE Enterprise Segment Combination
CSC expects the future combined company to generate approximately 11 percent of its $26 billion annual revenue in the U.S. public sector.
Lockheed Services Unit Lands Potential $733M Army Sensor & Data Support Task Order
The IS&GS segment to merge with Leidos will help manage and operate sensor equipment under the potential three-year order.
DHS Issues RFI on Biometric Exit Program
Industry is asked for information on biometric platforms that could collect fingerprints, photographs and match people with records for a potential $7.2 billion program.
Neustar to Split In Two Independent Companies
News of the division comes nearly 14 months after the FCC said Telcordia would take over the contract to run the U.S. phone number management program.
FedRAMP Releases Cloud Security Requirements For High-Impact Unclassified Gov’t Data
Agencies categorize close to 80 percent of total government data at low and moderate impact levels to represent half of overall federal IT spending.
Microsoft, CSRA, Amazon Web Services Receive FedRAMP High Baseline Cloud Designation
All three vendors have their cloud offerings approved for agencies to operate on sensitive and unclassified systems.
Riverbed’s Davis Johnson on Continuous Monitoring Trends & How Agencies Can Understand Their IT Assets
Johnson also describes the company’s efforts to complement commercial and federal work in this Q&A with ExecutiveBiz.
House, Senate to Begin Work on Fiscal 2017 NDAA Reconciliation
Lawmakers in both chambers have to hammer out differences in their respective defense spending bills before the White House can sign legislation.
House Panel OKs $41B Homeland Security Discretionary Budget for FY 2017
DHS would receive a $100 million increase from the previous fiscal year’s budget after House appropriators moved the new bill through a voice vote.
GSA Seeks to Collect Transactional Procurement Data Via Final Rule; Tom Sharpe, Anne Rung Comment
Contractors will have to report transactional acquisition data under the new rule intended to move forward the administration’s category management push.

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