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Raynor reviews: stock market winners and losers

Now halfway through the financial year, Nick Raynor, investment adviser at The Share Centre, reviews the performance of the FTSE100 and identifies the year’s biggest winners and losers

Over the past six months, the FTSE100 has risen 33% from a low of 3933 back in March to a confident 5257. This steady climb has been fuelled by increased investor confidence as many return to the stock market in search of income and growth.

The latest results from the Virgin Money Investor Intentions Index confirm the trend. Despite the relative safety of cash, the index indicates cash investments have fallen out of favour with investors in light of low interest rates. Instead many investors are now turning to stocks and shares.

According to the index, the number of financial advisers recommending cash investments has fallen from 86% to 55% in the past 12 months, while year-on-year figures indicate the number of financial advisers recommending investors consider UK shares has increased from 78% to 80% since this time last year.

Negative return
While the FTSE100 may be on the up, it’s certainly not the case for many of the companies trading on the market. Thomas Cook, United Utilities, BAE Systems, Severn Trent and Reed Elsevier, for example, have all produced a negative return.

It’s worth bearing in mind however, that these companies may have opted to continue to pay dividends, which may well mean they actually produced a better return for investors than the figures suggest.

Best performer
Among the FTSE100’s best performers are Kazakhmys, Vedanta, Rentokil, Barclays and Aviva. Interestingly, the top two best performers, Kazakhmys and Vedanta, are mining and metals companies, a sector which has been identified as underpinning increasing investor confidence.

In the second week of October, the Indian-focused miner Vedanta announced a near 16% increase in zinc output during the second quarter of 2009, while its iron ore output rose 27%. The rise in output follows a significant investment in new mines and smelters by the company; its share price subsequently rose by 85p to £21.90.

With investor confidence returning and the success of mining operations such as Vedanta pushing the FTSE100 back into positive territory, the market is showing healthy signs that it’s regaining its strength. The road to a full recovery, however, will be steep and unpredictable. 

by Nick Raynor, investment adviser at The Share Centre, 16 October 2009

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