London, 5 August 2008 – As the first anniversary of Northern Rock’s near demise approaches, analysis by Fidelity International shows that the credit crunch has led to increased concentration among Britain’s blue chip companies*. Before the credit crunch, the top ten companies by market value accounted for 45% of the FTSE 100. Today this has risen to 49%.
Barclays, HBOS and the Royal Bank of Scotland have fallen out of the top ten, leaving HSBC as the only representative of the banking sector. They have been replaced by natural resources companies: BG Group, BHP Billiton and Rio Tinto.
In total, 18 companies have fallen out of the FTSE 100 since 9th August last year - due to either merger and acquisition, deterioration in their market value or, as in the case of Northern Rock, no longer existing as a publicly quoted company.
Having dominated the UK market for so long and representing almost 20% of the FTSE 100 index a year ago, the banking sector has been reduced to 16%. On the back of rising oil prices, oil and gas producers at 20% have taken the top spot in the sector stakes. The mining sector has also been a big winner, increasing its weighting by almost half to nearly 13%.
In terms of share price, Rio Tinto enjoyed the largest increase over the period rising 60%. British Energy Group was second up 57% and BG Group third up nearly 42%. In contrast, while Northern Rock’s share price plummeted and it ceased to be a publicly traded company, 3 other stocks saw their value drop by more than 75% - Barratt Developments whose share price fell almost 90%, Yell Group (-85%) and Punch Taverns (-77%).
Tom Ewing, manager of the Fidelity UK Growth Fund said:” Whilst the fall in bank stocks has been precipitous, I believe the lack of visibility over earnings in 2009 and likelihood of increased regulation going forward makes a sustained rebound unlikely. The outlook for the
oil stocks, however, looks more promising. Even though the oil price has fallen from its recent highs it still remains over 60% above the level of a year ago. As such, earnings and dividend streams for oil majors look very robust. This makes it difficult to see them losing their dominance in the FTSE for some time to come".
| Top 10 on 9th August 2007 |
Top 10 on 22nd July 2008 |
| Royal Dutch Shell |
7.84% |
Royal Dutch Shell |
8.92% |
| HSBC |
6.94% |
BP |
8.92% |
| BP |
6.80% |
HSBC |
HSBC |
| Vodafone |
5.54% |
5.54% |
5.17% |
| Glaxosmithkline |
4.81% |
Glaxosmithkline |
4.83% |
| RBS |
3.61% |
RBS |
3.83% |
| Barclays |
2.90% |
BG Group |
2.82%
|
Anglo American
|
2.39% |
Anglo American |
2.81%
|
| AstraZeneca |
2.36% |
BAT |
2.76%
|
| HBOS |
2.22% |
BHP |
2.69% |
| Companies relegated from the FTSE 100 |
Companies promoted to FTSE 100 |
| Alliance & Leicester |
Admiral Group |
| Barratt Developments |
Alliance Trust |
| Daily Mail |
AMEC |
| DSG |
International Bunzl
|
| Hanson |
Cairn Energy |
| Home Retail Group |
Carphone Warehouse |
| Imperial Chemical |
Industries Cobham |
| Invesco Eurasian |
Natural Resources |
| Kelda Group |
Ferrexpo |
| Mitchells & Butlers |
First Group |
| Northern Rock |
G4S |
| Persimmon |
Invensys |
| Punch Taverns |
London Stock Exchange
|
| Resolution |
Petrofac |
| Scottish & Newcastle |
Thomas Cook |
| Segro |
Tui Travel |
| Tate & Lyle |
Tullow Oil
|
| Yell Group |
Wood Group
|
| Biggest falls in price (total returns): |
| Barratt Developments |
-89.73% |
| Yell Group |
-84.96% |
| Punch Taverns |
-76.84% |
| Persimmon |
-72.14% |
| DSG International |
– 70.41% |
| Biggest rice rises (total returns): |
| Rio Tinto |
+60.01% |
| British Energy Group |
+57.13% |
| BG Group |
+41.55% |
| Kazakhmys |
+27.68% |
| Xstrata |
24.64% |
FIL Limited (“FIL”) and its subsidiary companies serve the major markets of the world by providing investment products and services to individuals and institutional investors outside the US. FIL Limited manages a total of £129.5 billion of assets**.
Notes to editors:
* Source: Fidelity/Morningstar UK Retail Prices Index (RPI) April 1999 to 3 March 2008
**Source: Fidelity as at 31.12.07
FundsNetwork, Fidelity’s fund platform, was launched in June 2000. It offers advisers and their clients the ability to invest, manage and monitor their investments in one place, bringing them control, efficiency and new business opportunities. The FundsNetwork service is offered and managed by Financial Administration Services Limited. FundsNetworkTM is a trademark of FIL Limited. The Fidelity ISA is offered and managed by Financial Administration Services Limited. The value of tax savings and eligibility to invest in an ISA will depend on individual circumstances and all tax rules may change in the future. Any opinions expressed are made at the time of writing and can be subject to change without notification. The value of investments and the income from them can go down as well as up and an investor may not get back the original amount invested. Investors should also note that the views expressed may no longer be current and may have already been acted upon by Fidelity. Assets as at 31.12.07 are those of FIL Limited (FIL).
