London stocks: winners and losers since Brexit vote

 11 Oct 2016 - 16:01

London stocks: winners and losers since Brexit vote

AFP

London: London's benchmark FTSE 100 index has shot to a record high, propelled upwards in large part by a sliding pound since Britain's June vote to exit the European Union.

The FTSE hit an all-time peak of 7,129.83 points on Tuesday, thanks also to a surge in share prices of heavyweight energy groups following Monday's sharp bounce in oil prices.

The winners

Multinationals based in the UK selling goods abroad have seen their share prices shoot higher since the June 23 Brexit referendum on expectations of sizeable improvements to earnings. This is owing to the weaker pound making products cheaper for holders of rival currencies.

The pound has hit a series of 31-year low points versus the dollar and multi-year troughs against the euro since the vote and in response to the British government's timetable and terms regarding its exit.

Since the close of trading on June 23, British pharmaceutical giant GlaxoSmithKline has seen its share price jump by almost a fifth in value. Rival AstraZeneca has fared even better, gaining 29 percent. Global software companies Micro Focus and Sage have meanwhile surged by around 40 and 20 percent respectively.

There have equally been large gains for companies with a small presence in the UK but whose earnings are denominated in sterling. Diageo, which makes and sells Guinness stout, Smirnoff vodka and Johnnie Walker whisky across the globe, has enjoyed a 22-percent rise in its share price since June 23. Cigarette maker British American Tobacco and caterer Compass have jumped 14 and 15 percent respectively in that time.

The FTSE 100 has benefitted massively since the end of June also thanks to a recovery in commodity prices that has sent shares of energy and mining groups rocketing. Over the past 3.5 months, BP has gained 23 percent, Shell 13 percent, while miners Anglo American and BHP Billiton have soared by 50 and 38 percent respectively. 

The Losers

Offsetting the strong gains among the 100-strong company elite on the FTSE have been large falls in the share prices of banks and construction firms.

Barclays has shed seven percent, while Lloyds Banking Group and Royal Bank of Scotland -- each bailed out with taxpayers funds at the height of the global financial crisis -- have shed a quarter of their values in less than four months.

The Bank of England's decision to cut its main interest rate to a record low 0.25 percent to help ward off recession following the Brexit vote is squeezing lenders' margins further.

Building firms are meanwhile being hit by expectations of a slowdown to the residential property market. Taylor Wimpey shares have shed 20 percent, while rival Berkeley has slid out of the top 100 index.

Airlines, threatened by the UK's likely departure from the European single market, have also nosedived in recent weeks. EasyJet has plunged 38 percent and IAG, parent group of British Airways and Spanish carrier Iberia, has lost a quarter of its share price value since late June -- a result also of the sliding pound and a rebound in jet fuel prices on the back of recovering crude oil.