With UK markets in turmoil, we round up and explain some of the best and worst performers of the year on the FTSE 100.
It all started out so hopeful at the start of 2018. Despite concerns over Brexit and the prospect a Corbyn-led Labour government, the FTSE 100 was predicted to continue edging up, with predictions that the blue-chip index could finally break the 8,000 points barrier.
Instead, by the end of November, the index had fallen to below the 7,000 mark with year-to-date total returns sitting in the red (the FTSE 100 has continued to fall since the time of writing).
Of course, stock market indices are an aggregate of share prices, with performance between different companies ranging widely. Below, we round up and explain some of the best and worst performers of the year (as of November end 2018).
Best performers of 2018
The top performer on the FTSE 100 in 2018 was Ocado, (as of November end) more than doubling investors’ money, with a total return of 109%. Key behind this good performance was successfully convincing investors that it not just an online retailer, but a technology and software firm.
As Russ Mould, investment director of AJ Bell notes: “The firm signed more licensing deals for its Ocado Solutions technology and the shares roared higher.”
Although while the index’s top performer, it should be noted the company’s share prices are still a fair way below their summer peak.
Pearson staged a turnaround in 2018. Multiple profit warnings and a dividend cut in 2017 weighed heavily on the company’s share price. However, no further profit warnings materialising in 2018 reassured investors that the company’s problem were, as they argued at the time, “down to specific factors in the US academic textbook market and not the result of more secular, long-term problems with the publisher’s business model,” notes Mould. The company returned shareholders 33.3% over the year.
Also in form was Sainsbury’s, which returned investors 30.6%. The story behind the company’s strong share price performance is relatively simple: investors welcomed its planned merger with Asda.
Corporate restructuring also helped to boost the share performance of Whitbread, which saw a total return of 17.5%. As Mould notes: “Whitbread announced plans to break itself up and then sold Costa Coffee to Coca-Cola, leaving itself with the Premier Inn hotel chain.”
The worst performer on the index was Fresnillo, which saw a decline of 45.2%. With the company being a silver miner, it was hit hard by silver’s price decline, which fell by some 15% over the year, its lowest level since 2016.
Added to this, with Fresnillo being a Mexican company (albeit listed on the FTSE 100), it was hit by investor concerns over Mexico’s newly elected left-leaning President, Andres Manuel Lopez Obrador.
Also have a disappointing year was British American Tobacco, which lost 42.3% of its share price between January and November. A number of factor’s weighed on the tobacco giant, from increased regulatory threats in the US, to disappointing sales growth for its “next-generation” products in Japan. At the same time, notes Mould: “BAT’s £42 billion acquisition of Reynolds American in 2017 also came in for fresh scrutiny.”
Unsurprisingly, advertising giant WPP found itself among the worst performers. The sudden and unamicable departure of the company chief executive of 33 years, Martin Sorrell, shook investor confidence. Added to this, new boss Mark Read’s first job was to issue a profit warning.
Royal Mail continued its tradition of providing shareholders with losses, with its share price falling by 25.7% this year. First there was a furore over the company’s new chief executive, Rico Back, receiving a generous “golden hello.” Next, the company insured a profit warnings, citing higher than expected costs and lower than expected volumes.
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