Housebuilders and airline stocks have made solid gains this year, but the FTSE 100 company leading the way in 2017 was UAE-focused healthcare provider NMC Health (NMC), according to data from Morningstar Direct.
Investors focused on the UK’s blue-chip index have had a quieter year than some, with gains of around 5% year to date. That modest performance can be attributed to a recovery in the pound after a heavy depreciation in the second half of last year.
Three-quarters of the FTSE 100's constituents derive their revenues from overseas. The index has weakened when sterling, which has risen over 8% this year, strengthened against the euro and dollar. That means the mid-cap FTSE 250 has outperformed its larger counterpart, more than doubling its returns.
Still, 70 of the UK’s 101 largest stocks have produced a positive return in 2017.
NMC Health
Since floating in April 2012, NMC’s share price has risen 1,254% to £28.43, culminating in promotion to the FTSE 100 in September. It’s up 82% in 2017, as it continues to branch out from its Abu Dhabi base. It became one of the first foreign entrants into the healthcare sector in Saudi Arabia recently.
Shares jumped 7% after half-year results in August showed revenues rose 34% year-on-year and it said full-year profits were set to be at the top range of its guidance.
Prasanth Manghat, chief executive, said it’s continuing to benefit from insurance reforms in Dubai and healthcare privatisation initiatives in Saudi Arabia and Oman. The share price hit a record high of £32 in November before paring back to today’s level.
Worldpay (WPG)
Payments firm Worldpay has also delivered strong share price gains, up 62% year to date. That rise is for the most part down to the market reaction to a successful takeover bid from US payment processor rival Vantiv (VNTV).
The deal, which should go through next month, sent shares up 28% and they’ve continued to march higher since, to 434p today. The $10 billion cash and stock merger will create a near-$30 billion entity.
Worldpay is expected to be delisted from the London Stock Exchange, with Vantiv keeping its New York listing before seeking a secondary listing in London once the deal goes through.
Housebuilders
Three housebuilders sit in the top 10 best performers in the FTSE 100, with Persimmon (PSN) and Berkeley (BKG) at third and fourth place and up 55.5% and 53% respectively. Barratt Developments (BDEV) sits in eighth place, up 44.5% and Taylor Wimpey (TW.) just misses the top 10.
It caps an impressive fightback since the EU referendum back in June 2016, with the sector one of the hardest hit as sentiment towards the housing market plummeting. The former two shares have more than doubled since their nadirs.
Incentives like Help to Buy have buoyed these firms as the government continues to attempt to stem the housing crisis.
Their winning run was only de-railed by Chancellor Phillip Hammond’s November Budget crackdown on landbanking, where the large home builders stockpile years’ worth of plots.
However, a subsequent upbeat trading update from Berkeley earlier this month put the wind back in their sails.
Their rise hasn’t been without controversy, though, with a number facing questions over bonuses. Persimmon in particular has been caught up in the row, with chairman Nicholas Wrigley eventually resigning on Friday over a planned £200 million-plus bonus package for its top three bosses.
Despite strong performance in the past 18 months, data from trading platform Hargreaves Lansdown (HL.) show all four of the above builders were among the most sold shares in 2017 as investors took profits.
Airlines
International Consolidated Airlines (IAG) and easyJet (EZJ) sit fifth and seventh, up 48.6% and 46.4% respectively, despite fears over the future of flights between the UK and EU after Brexit.
IAG has defied a power-related IT failure over the May bank holiday weekend and a terror attack in Barcelona to power higher this year, while easyJet saw a record number of passengers board its flights in 2017.
Despite this cracking performance, investors have gone cold on easyJet, according to Hargreaves. A record load factor of 92.6% didn’t stop profits falling 17% amid a competitive pricing environment. Now departed CEO Carolyn McCall said it’s been “a difficult year for the aviation industry”.
The top 10 is rounded off by product tester Intertek (ITRK), up 46.8%, Hargreaves Lansdown itself, up 43% and global investment trust behemoth Scottish Mortgage (SMT), up 42.2%.
Worst Performing Stocks
Only 10 stocks on the FTSE 100 have racked up double-digit losses this year, headed by Centrica (CNA), which has seen more than a third of its value wiped off so far this year.
However, UK stock investors have looked for opportunities in the value end of the market, according to Laith Khalaf, senior analyst at Hargreaves.
All of the following appear in the firm’s 10 most-purchased FTSE 100 shares in 2017, despite also being in the 10 worst-performing list: BT (BT.A), -21.5%; GlaxoSmithKline (GSK), -12%; Centrica, Shire (SHP), -19.2%; WPP (WPP), -20.2%; and ITV (ITV), -13.8%.
Elsewhere, support services firm Babcock (BAB) was down 25.2%; healthcare providers Mediclinic International (MDC), down 20%, and ConvaTec (CTEC) was 11.6% lower. Theme park owner Merlin Entertainments (MERL), down 17.9%, also fared poorly.
FTSE 100 Outlook
Opinion on the outlook for the FTSE 100 next year is mixed. An optimistic prediction of the index breaching 8,000 for the first time ever came courtesy of AJ Bell this week.
Many fund managers believe the FTSE 100 will continue to make gains through 2018, with 64% of investment trust managers believing it will be between 7,500 and 8,000 in 12 months’ time.
Others are more cautious. Ben Yearsley, director at Shore Financial Planning, thinks the FTSE 100 will end up flat over the year. However, he notes that all bets are off if there’s another General Election, with 8,000 a distinct possibility should Labour leader Jeremy Corbyn become Prime Minister, thanks to the tailwind effect of a weakening pound.
