Abu Dhabi, UAESaturday 24 August 2019

UK stock market: the battered losers and underwhelming winners of 2018

With Brexit at the forefront of investors' minds, eight UK stocks lost more their three quarters of their value

One of the biggest losers of the year was Debenhams, which took a heavy hit from the slowdown in spending in department stores. Photo: Reuters
One of the biggest losers of the year was Debenhams, which took a heavy hit from the slowdown in spending in department stores. Photo: Reuters

The glum year experienced by the UK’s stock market has Brexit and its accompanying uncertainties painted all over it and among individual names, the losers upstaged the winners.

The FTSE All-Share Index slipped 13 per cent, in line with the dismal year had by Europe’s Stoxx 600 benchmark. Eight UK stocks lost more than three quarters of their market value, while only two winners managed to match that to the upside. The FTSE 100 Index is set for its biggest annual drop since the financial crisis a decade ago.

Graphic by The National 
Graphic by The National 

Cash is streaming out of stock funds in the UK, and money managers globally have slashed their allocations to the country. Still, the optimists aren’t extinct. Some see domestically focused UK stocks as “bargain basement” buys, given the beating Brexit uncertainty has dealt to the market, and at least one bank reckons UKequities might be the surprise winner in 2019.

Here’s a list of the FTSE All-Share’s biggest and most interesting winners and losers of the year:

The winners

UK-listed online supermarket Ocado gained 94 per cent this year. Photo: Bloomberg
UK-listed online supermarket Ocado gained 94 per cent this year. Photo: Bloomberg

Ocado Group: up 94 per cent

This was the year that the promise of Ocado, a UK grocery-delivery company, finally started to come to fruition. After years of investors expecting it to sign deals with international retailers, Ocado scored several during the year that served to legitimise its aims and allowed it to gain membership in the FTSE 100. But 2019 will be when investors get to see how much these international deals are going to cost Ocado to operate and whether all that promise will eventually yield a sustainable future.

Gem Diamonds: up 60 per cent

The simple fact is, one of the best things that can happen to a diamond miner is to find a slew of really, really big diamonds. While peers struggled amid concerns about trade and sinking base metals prices, Gem Diamonds unearthed a record number of 100-carat-plus stones from its Letseng mine in Lesotho, southern Africa. Now if it can only do the same in 2019.

Plus500: up 53 per cent

The cryptocurrency boom may be petering out but at least one company got a big boost from it this year. Plus500’s contracts for difference linked to Bitcoin and its ilk helped the shares hit a record high in May, providing a buffer for the firm as it ran up against extra concerns about new regulations on its industry. Those rules meant its rivals, IG Group Holdings and CMC Markets, both dropped while Plus500 managed to hold onto its gains.

Hikma Pharmaceuticals: up 49 per cent

The stars aligned for Hikma in 2018. The company raised its revenue and earnings guidance twice after stronger-than-anticipated performance at its injectable and generic-drug franchises, plus it benefited from optimism about US drug pricing for injectable products. Debates around the price of medicines in the US, the subject of heavy criticism from President Donald Trump, have weighed on the pharmaceutical market but Hikma sailed through.

The best of the rest

The UK’s star IPO performer was investment advisory house IntegraFin Holdings (up 57 pe rcent), which entered the FTSE 250 Index after listing in February. Nanoco Group (up 44 per cent), a maker of nanoparticles used in medical imaging and televisions, recovered from a profit warning in April as it secured commercial orders for its products. Polyolefin foams maker Zotefoams (up 53 per cent) upgraded guidance twice, carrying on the optimism with which it ended 2017 when it signed a deal to supply foams to sneaker giant Nike.

_____________

Read more:

The investment heroes and villains of 2018

UAE residents wait for 'optimal time' to buy falling pound amid Brexit turmoil

Does the Brexit decision present an unmissable buying opportunity?

Nine defensive stocks for today's bumpy markets

____________

The Losers

Carpetright and Debenhams: down 89 per cent and 86 per cent respectively

It seems only fair to include the two worst stories in the UK retail sector together. Carpetright has suffered as consumers cut back on more expensive purchases like carpets and flooring, while Debenhams took a heavy hit from the slowdown in spending in department stores that led to the collapse of its rival, House of Fraser. The list of shame for UK retail is long, with convenience store operator McColl’s Retail Group and fashion retailer Superdry also getting clobbered. And based on revenue updates in December, the sector is in need of a Christmas miracle.

Countrywide: down 87 per cent

The UK’s biggest estate agent had to come cap in hand to shareholders in August, selling stock at a huge discount to shore up its balance sheet. The sector has been hammered by the uncertainty Brexit has caused, as potential house buyers wait for the outcome of negotiations before they start splashing out on a new home. Until the picture becomes clearer on the U.K.’s exit from the European Union, there’s nothing to suggest the situation is going to improve soon.

A Thomas Cook Airlines operated Airbus 330 aircraft. Thomas Cook Group was hit by Brexit-related uncertainty and the hot summer. Photo: AFP
A Thomas Cook Airlines operated Airbus 330 aircraft. Thomas Cook Group was hit by Brexit-related uncertainty and the hot summer. Photo: AFP

Thomas Cook Group: down 76 per cent

Long the byword for travel agents in the UK, Thomas Cook had a woeful year. Two profit warnings only two months apart shattered confidence in the company and eyes started to turn to its debt pile as shares slumped. The group was hit partly by Brexit-related uncertainty but also by the UK’s other primary conversation topic, the weather. A very hot summer meant many holidaymakers decided to stay at home rather than spending to go abroad, a pattern Thomas Cook will have no power to influence but which it will hope does not repeat in 2019.

Indivior: down 73 per cent

The UK firm which makes Suboxone Film, a treatment for opioid addiction, suffered a tough year as a generic version of its key medicine came closer to reaching the market. Court delays have kept the cheaper alternatives out of the way for now, but Indivior essentially faces a race against time for its other drugs to gain traction before the income from Suboxone Film starts to dry up.

The worst of the rest

Newspaper delivery firm Connect Group (down 64 per cent) issued a kitchen-sink profit warning in June that wiped out almost half its market value in a day. Undertaker Dignity (down 63 per cent) had a rollercoaster year capped off by a big drop when UK regulators launched a pricing probe of the funeral market. Construction firm Kier Group (down 62 per cent) plunged when it announced a rights issue and saw its problems compounded when the appetite for the new shares proved underwhelming.

Updated: December 30, 2018 02:48 PM

SHARE

SHARE