Best and worst performing FTSE shares since 2016 low

The FTSE has bounced back sharply since its post-Referendum low, helped by a weakening pound, a cut in interest rates, and economic data which has turned out to be better than expected says Laith Khalaf, senior analyst at Hargreaves Lansdown.

Best and worst performing FTSE shares since 2016 low

So far this year the FTSE 100 has been lifted by rising commodity prices, a weakening pound and looser monetary policy. The UK stock market as a whole has been one of the main beneficiaries of Brexit, through some stocks and sectors have still suffered significantly since the Referendum result was announced.

The reality is the biggest stocks in the index dominate its performance, and the likes of HSBC, Royal Dutch Shell, and British American Tobacco all have international earnings which are now worth more in pounds and pence thanks to sterling’s decline.

Lower interest rates have also given the stock market a leg up, because with cash and bonds yielding next to nothing, equities are the natural alternative for anyone looking for a decent level of income. Nor will there be any shortage of income-seekers at the moment, as millions of baby boomers are reaching retirement age, while the recent pension freedoms conveniently allow them to park their retirement funds in the stock market rather than buying an annuity.

While UK stock market indices may be at, or near, historic highs that does not necessarily mean UK stocks are expensive. If you compare share prices to company earnings, the valuation of the UK stock market is actually somewhere in the middle of its historic range, neither particularly cheap, nor dear, at current prices.

This is in stark contrast to the former peak of the market in 1999, when the price-earnings ratio of the UK stock market stood at an eye-watering level.

The near-term path for the stock market is, as always, unpredictable. There is never any lack of macro-economic worries to deter potential investors from putting their money to work in the stock market, and that holds true today. Nonetheless the historical score card suggests it is a good home for long term investment.


Best and worst performing FTSE 100 shares since 2016 low

Price change 11th Feb 2016 to 3rd Oct 2016
Anglo American PLC 215%
Glencore PLC 145%
Fresnillo PLC 109%
BHP Billiton PLC 87%
Smiths Group PLC 70%
Micro Focus International PLC 69%
Ashtead Group PLC 67%
3i Group PLC 67%
Standard Chartered PLC 64%
Polymetal International PLC 57%
Dixons Carphone PLC -13%
Associated British Foods PLC -13%
BT Group PLC -15%
International Consolidated Airlines Group PLC -17%
Marks & Spencer Group PLC -19%
Royal Bank of Scotland Group PLC -20%
ITV PLC -23%
Next PLC -28%
easyJet PLC -31%
Capita PLC -37%

Source: Hargreaves Lansdown

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