First anniversary of the Brexit vote: Who are the winners and losers in the financial markets?

 
Lucy White
BRITAIN-POLITICS-EU-BREXIT
David Davis is secretary of state for exiting the European Union (Source: Getty)

Exactly one year after the UK voted to leave the European Union, and in the same week that Brexit talks have finally begun, it may seem that little has actually changed.

As the debate still rages over immigration and whether the UK should remain in the single market, little has been settled so far.

But already the pound has sunk, the stock market has risen and winners and losers are beginning to emerge.

Winners Losers

UK stock market

The Ftse All-Share index remained afloat, making a 21.8 per cent return in the 12 months following the referendum. The Ftse 100 held this up at 22.6 per cent, while the Ftse 250 performed less impressively at 17.2 per cent. Yet both of these were lacklustre compared with countries such as France and Germany's indices, both of which returned more than 40 per cent.

Domestic consumer-facing businesses

The stock market may have kept its head above water on average, but some businesses either directly or indirectly serving the British consumer have felt the strain. As inflation ratchets up the pressure on customers, companies such as Dixons Carphone, Travis Perkins and Berkeley Group have found themselves relegated from the index of the UK's 100 biggest companies.

Small cap index

The Ftse Small Cap index appeared to outperform its blue chip counterpart, returning a strong 26 per cent. However much of these returns were created by investment trusts, many of which invest abroad.

Commercial property funds

In the wake of the Brexit vote, high levels of withdrawals led to trading being suspended in several multi-billion pound funds as investors feared for the UK's future. Some of the managers affected included Henderson Global Investors, Columbia Threadneedle, Standard Life, Aviva and M&G. Though the sector has now returned to normal, the episode acted as a warning.

UK government bonds

Bonds held relatively steady – the Ftse Actuaries UK Gilts index indicated a return of 6.2 per cent. But according to Hargreaves Lansdown analyst Laith Khalaf, there are “legitimate concerns that these bonds are in bubble territory”.

Holidaymakers‚Äč

Although the weaker sterling has boosted the stock market and pushed up inflation, which many economists believe is good for the UK economy, travellers abroad will have got less foreign currency in return for their pound.

Read more: Why the FTSE 100 rises when sterling falls

"The performance of capital markets over the last year tells us that the financial effects of Brexit are about as predictable as the British weather," said Khalaf.

"Investors should therefore stick to proven means of building up a decent nest egg, by squirrelling away as much as possible, maintaining a diversified portfolio, and using tax shelters to protect profits from the taxman."

The difference between how money investors would have earned across difference indices is quite substantial.

Index Value of £100 invested since Brexit vote

UK indices

Ftse 100 £123
Ftse 250 £117
Ftse Small Cap £126
Ftse Small Cap without investment trusts £121
Ftse All-Share £122

Overseas indices

S&P 500 £138
MSCI Europe, excluding UK £139
CAC 40 (France) £141
Dax 30 (Germany) £144
Topix (Japan) £141
MSCI Emerging Markets £145

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