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Brexit 3 months in - winners and losers

Laith Khalaf | 23 September 2016 | A A A

You’re about to read press releases, which we’ve written for media use only. They’re not intended for individual investors. They’re not personal advice and don’t include any recommendations.

No recommendation

You’re about to read press releases, which we’ve written for media use only. They’re not intended for individual investors. They’re not personal advice and don’t include any recommendations.

Media contact:

Laith Khalaf

Senior Analyst

Direct Line: 0117 980 9866

Mobile: 07977570820

Email: laith.khalaf@hl.co.uk

  • Property funds are bottom of the performance table
  • Housebuilders, banks and airlines feel the Brexit burn
  • Miners and international companies prosper
  • Best and worst performing funds, shares and markets

Tomorrow marks three months since the EU referendum result. Here is a rundown of the performance of some of the major stock market indices, funds and companies over the last 3 months.

Laith Khalaf, Senior Analyst, Hargreaves Lansdown:

‘The last three months have been the best of times for some sectors, and the worst of times for others. The share prices of banks, airlines and property funds have all been burned by Brexit, while companies with international revenue streams have enjoyed a Brexit boost.

Stock markets as a whole have been buoyant over the summer, once again confounding the adage that urges investors to sell in May. There have undoubtedly been winners and losers, and prudent investors would certainly have reaped the benefits of holding a diversified portfolio over the last three months.

It’s still very early days in the process of Brexit, and no doubt there are more thrills and spills to come. So far economic data has held up relatively well since the vote, but it may be we are still waiting for the aftershocks to register.

The UK stock market has the advantage of being populated by truly global companies, and so the fortunes of the UK economy are only one driver of returns. In the short run there is no telling which way the stock market is heading, but for long term investors there are really very few other options for harvesting a decent return, given the low returns now available on cash and bonds.'

Stock market performance

The falling pound is at the heart of the strong performance of the UK stock market, and indeed other overseas markets once converted into sterling. For instance, the French stock market has risen just 1.1% in local currency terms, but the relative movements of the euro and the pound mean this translates into a 13.1% gain for UK investors.

The FTSE 100 now stands close to the 7,000 mark, after dipping to 5,537 in February. Even the mid cap FTSE 250 index, which suffered a price shock in the wake of Brexit, has recovered and posted a strong return over the summer. Meanwhile the UK’s smaller companies have in aggregate performed almost as well as their larger blue chip cousins over the last three months.

Bond markets have also performed strongly as markets priced in interest rates being lower for longer. The benchmark 10 year UK gilt now yields just 0.7%, a remarkably low figure which implies an extremely downbeat assessment of economic growth in the coming decade.

The property market has proved pretty resilient in the face of Brexit, with residential prices still defying gravity and rising by 1.4%. The commercial property market fell by 2.3% over the period; not great, but not as bad as the turmoil in the commercial property funds sector might have suggested.

For UK investors, gold has glittered in the light cast by Brexit, in large part as a result of the weakening of the currency, but the precious metal also rose in dollar terms as markets priced in further delays to a rise in global interest rates (gold does quite well when rates are low, because the fact it doesn’t pay an income looks less of a drawback when compared to lower yields on cash and bonds).

Total return since 23rd June 2016
in sterling terms in local currency
UK stock indices
FTSE 100 10.1% 10.1%
FTSE 250 4.6% 4.6%
FTSE Small Cap 9.7% 9.7%
FTSE All-Share 9.1% 9.1%
Overseas stock indices
S&P 500 (US) 17.1% 3.6%
CAC 40 (France) 13.1% 1.1%
DAX 30 (Germany) 16.5% 4.1%
Shanghai Composite (China) 17.3% 5.2%
Hang Seng (Hong Kong) 30.1% 15.1%%
Topix (Japan) 23.7% 4.3%
Bond indices
FTSE A British Govt All Stocks (UK gilts) 8.2% 8.2%
Markit iBoxx Sterling Corporates (Corporate bonds) 9.3% 9.3%
Property indices (data to 31st August)
UK Nationwide House Price Index (Residential) 1.4% 1.4%
IPD UK All Property Monthly (Commercial) -2.3% -2.3%
Gold 19.6% 5.8%

Source: Lipper Hindsight, Bloomberg

Best and worst performing UK stocks

The last three months have seen a resurgence in the fortunes of the mining sector, thanks to a continuing rise in commodity prices and a weakening pound. Companies with international earnings have done quite nicely out of Brexit, with the likes of Astra Zeneca, HSBC and Burberry benefiting from their global footprint.

At the other end of spectrum shares in airlines, house builders and banks have borne the brunt of Brexit, as investors shunned stocks which are heavily plugged into the domestic UK economy. Challenger bank Metro Bank has bucked the trend in its sector though, following a strong set of results which it posted at the end of July.

FTSE 100 Price change since 23rd June 2016
Fresnillo PLC 45.4%
Glencore PLC 35.9%
Anglo American PLC 32.5%
AstraZeneca PLC 32.3%
Micro Focus International PLC PLC 32.2%
Shire PLC 28.2%
HSBC Holdings PLC 27.0%
Burberry Group PLC 26.6%
Smiths Group PLC 26.3%
BHP Billiton PLC 25.7%
Dixons Carphone PLC -13.9%
Persimmon PLC -14.3%
Barratt Developments PLC -15.7%
British Land Co PLC -16.1%
Travis Perkins PLC -18.2%
Taylor Wimpey PLC -20.3%
Lloyds Banking Group PLC -20.8%
International Consolidated Airlines Group PLC -22.7%
Royal Bank of Scotland Group PLC -25.5%
easyJet PLC -31.8%

Source: Bloomberg

FTSE 250 Price change since 23rd June 2016
Hochschild Mining PLC 84.8%
KAZ Minerals PLC 55.0%
Sophos Group PLC 48.6%
Acacia Mining PLC 48.2%
Indivior PLC 42.1%
Centamin PLC 36.2%
Polar Capital Technology Trust PLC 33.7%
Metro Bank PLC 33.6%
GVC Holdings PLC 30.9%
G4S PLC 30.6%
N Brown Group PLC -20.3%
CMC Markets PLC -20.8%
Berkeley Group Holdings PLC -20.9%
Crest Nicholson Holdings plc -21.9%
Derwent London PLC -23.1%
Sports Direct International PLC -26.0%
McCarthy & Stone PLC -29.6%
Grafton Group PLC -30.0%
Mitie Group PLC -31.1%
Countrywide PLC -37.7%

Source: Bloomberg

Best and worst performing funds

It’s been a storming summer for Chinese funds, which have enjoyed the twin tailwinds of a weakening pound and strong stock market performance, particularly in Hong Kong.

At the other end of the table, it’s property funds which make up the numbers. Things aren’t quite as ugly in the sector as they were, though there are still trading suspensions and fair value adjustments being applied.

Price change since 23rd June 2016
Julius Baer EF China Evolution 37.3%
WAY Charteris Gold & Precious Metals 37.2%
JPM Brazil Equity 35.7%
Henderson China Opportunities 35.4%
Old Mutual Henderson China Opportunities 35.3%
Junior Gold 35.0%
Henderson HF China 35.0%
Neptune China 34.5%
HSBC Chinese Equity 33.9%
Candriam Equities L Biotechnology 33.6%
Legal & General UK Property -3.9%
Aberdeen UK Property -4.5%
SF Webb Capital Smaller Companies Growth -4.5%
Henderson UK Property -4.6%
SLI UK Real Estate Retail -5.5%
M&G Property Portfolio Sterling -5.8%
Elite Webb Smaller Companies Income & Growth -5.9%
Aviva Investors Property Trust -6.2%
FP Argonaut Absolute Return -6.6%
Kames Property Income -8.8%

Source: Source:Lipper Hindsight

Currencies

The pound has been the highest profile casualty of the EU referendum, though the fall in sterling has proved to be a boon for many of the companies on the UK stock market.

Travelling to Europe is now 12% more expensive for holiday makers than it was on 23rd June, and travelling to the US is 14% more expensive.

23rd June 2016 22nd Sept 2016
USD/GBP 1.4877 1.3078
EUR/GBP 1.3072 1.1669

Source: Bloomberg

NOTES TO EDITORS

Globelynx and ISDN ready

Hargreaves Lansdown is equipped with a live in-house broadcast camera via the Globelynx network and has an ISDN line available for radio interviews - 0117 934 9006. To arrange an interview with a Hargreaves Lansdown spokesperson please contact the person you wish to speak to directly using the contact details above, or call Globelynx on 0207 963 7060 or email globelynx@globelynx.com.


You’re about to read press releases, which we’ve written for media use only. They’re not intended for individual investors. They’re not personal advice and don’t include any recommendations.