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The UK’s FTSE 100 is on track for its best performance since 2009, outpacing the US’s S&P 500 by a wide margin.
The benchmark index has returned 22.8 per cent year in the year to December 1 including dividends, led by gold miners and banks. The S&P rose by 16 per cent.
“You would have to go back to 2009 to see a better annual performance for the FTSE 100. There may therefore be a lot of people kicking themselves that they’d taken money out of the UK market,” said Dan Coatsworth, head of markets at investment broker AJ Bell.
“The year has been full of stories about sustained net outflows from UK funds, which is a surprise given the headline performance of the FTSE 100.”
Fifteen stocks have gained 50 per cent or more, including retailer Next and Games Workshop, famous for its Warhammer game figures.
The leader by a big margin has been gold and silver miner Fresnillo, up 364 per cent including dividends, easily its best performance since it listed in 2008. Another gold miner, Endeavour Mining, also had a powerful leap, more than doubling this year.
Both miners have far outpaced the rising value of gold this year, but Fresnillo had the added benefit of its silver production, which makes up nearly half its revenues. Silver’s price has nearly doubled this year, a bigger gain than gold.
Three UK-listed banks — Lloyds, Standard Chartered and Barclays — were all up by more than 63 per cent, having benefited from higher interest rates and steady lending. Standard Chartered and Prudential both have substantial exposure to China and south-east Asia region. Improving investor sentiment towards China and Hong Kong stimulated a sharp re-rating in Prudential’s valuation this year.
“It’s pretty rare to have the UK banking sector go up by 50 per cent or more,” said Georgina Hamilton, a UK equities portfolio manager at Polar Capital. “There’s been evidence of US investors buying in the banks. If you’re buying high street banks like Lloyds and NatWest you can’t be too pessimistic about the UK, can you?”
Another sector that has done well, especially in the second half of this year, is healthcare. “Globally, pharma has been a cheap sector compared with the tech sector,” said Sue Nofke, head of UK equities at Schroders.
“Pharma stocks have [high] quality characteristics and are trading cheaply against their history,” she added. “GSK [for example] has resolved its chief executive succession issue, which has caused investors to re-examine its prospects. And it’s been a strong performer in the second half of this year.”
GSK shares have had a very good run this year, up 39 per cent with dividends, much of that since late July. As worries about drug price cuts, particularly in the US, have faded, investors have begun buying.
Another big winner in the FTSE has been Rolls-Royce. Momentum in its share price has been maintained as the company ticks several boxes on market themes popular with investors globally, according to Ed Leggett, who runs the UK Select fund at Artemis.
“First, [its mainstay] aerospace engines have demand which outstrips supply and it’s an exclusive supplier to Airbus,” said Leggett. “Next, it ticks the defence box given its exposure to engines for military transport aircraft and for the Eurofighter. Finally, [capital spending on] AI gets ticked as well, as Rolls provides back-up power systems to data centres.”
At the other end of the spectrum, some big FTSE groups have suffered. Leading the list of poor performers is the advertising and media group WPP, down by 60 per cent. Its erstwhile chief executive Mark Read left in the summer, after a seven-year stint during which the shares had already fallen precipitously.
Its French rival Publicis last year displaced WPP as the biggest ad agency in the world by revenue. Moreover, WPP’s largest clients have reduced spending, while AI-driven alternatives threaten to siphon off lucrative work.
London Stock Exchange Group, now with substantial business in data provision, also did poorly this year, down about a fifth.
