A trader in Frankfurt reacts as stock markets tumble (Reuters)
A year ago, the FTSE 100 index of the biggest companies in the UK of began to falter. Then plummet. It finally reached a historic low of 4,993 on 23 March, the first day of the first lockdown.
Outside the world was changing as Covid ensured (though we didn’t really realise it at the time) that we would never again behave in quite the same way.
These changes and general trends in consumer behaviour have been playing out in the performance of FTSE 100 companies ever since, with online retailers and streaming services soaring in value, while many hospitality and travel firms have been left near to collapse.
In November the FTSE rallied as news of the Pfizer vaccine was confirmed, yet despite the rollout some companies have been unable to recover.
But unless you happen to be either a full-time investment analyst or an epidemiologist, and with the warning that “past performance is no guarantee of future returns” ringing in our ears, what lessons can investors take from the last world-changing year?
And, with yet more warnings that this pandemic won’t be the last, how will any of that help us in the future?
Susannah Streeter, spokesperson for investment platform Hargreaves Lansdown, picked out several companies which have performed especially well, or poorly, since February 2020.
To start with Amazon was unsurprisingly one of the best. Its share price has risen by 51 per cent in the past year and its profits are now accelerating at a faster rate than sales.
“In many ways the behavioural changes Covid 19 has brought have just sped up digital trends already sweeping through the economy,” says Streeter.
“Amazon now sits even higher on its throne as the undisputed king of ecommerce. As great swathes of the world were locked out of physical shops, virtual tills were ringing on a massive scale.”
Another online winner was Ocado. It saw its share price rise by 117 per cent, helped not just by its own popular delivery service but also from providing warehouses for retail partners including Morrisons.
AO World, which sells online electrical equipment including computers and washing machines, was the best performing London-listed company in the retail sector, with a rise in its share price of more than 305 per cent.
Another company which was allowed to stay open as an essential shop was B&M Stores. Along with household goods and DIY items it also sells a limited selection of groceries, and it saw its share price rise by 55 per cent.
Shops selling DIY products benefitted from the fact we have spent so much time at home with not much to do apart from try to improve our homes and gardens. Online sales of household goods rose by 73 per cent last year and B&Q’s owner Kingfisher saw its share price rise by 34 per cent.
Pet ownership has also increased as people buy or adopt pets to keep them company in lockdown. The share price of Pets at Home reflects this trend – it rose 30 per cent.
Another stock reflecting the trend of the past year was Netflix. Its share price soared by 46 per cent as cinemas shut their doors and we all watched a lot more via streaming services while in lockdown.
As we’ve not been able to see our friends and family in person, demand for parcel deliveries and online shopping has increased, helping Royal Mail’s share price to rise by 165 per cent.
When looking at the companies that have suffered because of the coronavirus, high street shops, many of which were already in decline, were among the worst affected.
Marks and Spencer, for example, saw its share price fall by 19 per cent despite a partnership with Ocado.
This trend is reflected in the performance of WHSmith, a ubiquitous presence at train stations and airports throughout the country. With lockdown badly affecting the number of passengers able to travel, and spend, it’s no wonder the share price was down 30 per cent.
Within the oil and gas industry, which saw the biggest losses out of all companies listed on the FTSE 100, BP was the worst performing company with a 39 per cent fall.
Hospitality and travel firms have seen their value plummet after international travel was shut down and foreign holidays axed by the prime minister.
With no one being able to fly anywhere, airlines were particularly badly hit. One of the worst performing FTSE 100 companies in this sector was the owner of British Airways, IAG, which saw shares fall by 61 per cent. That drop was matched by Tui, while Easyjet’s price fell by 43 per cent.
Another company to take a particularly big hit was Cineworld. Its share price is still 50 per cent lower than a year ago, despite the impending relaxation of coronavirus rules and the vaccine rollout.
While individual companies can be a good indicator of consumer trends, it’s also important to look at the overall performance of the FTSE 100.
Tom Stevenson, spokesperson for Fidelity International, says: “In the UK, areas like hospitality, the airlines, the oil majors and the banks have remained below their pre-pandemic levels while those sectors which stood to gain from life in lockdown – the supermarkets, pharma, and consumer staples manufacturers like Unilever – have held their ground.
“It’s fair to say the FTSE 100’s recovery has lagged behind its global counterparts, biased as the UK benchmark index is towards those companies which have suffered under lockdown restrictions.
“In contrast, US indices were propelled upwards far more quickly due to the larger weighting of tech stocks in America.”
Stephenson also warns against the urge to react in haste to bad news, such as in the early days of the pandemic last March when the FTSE started falling.
“If you sell in those times it’s likely you will lock in your loss because it can be hard to buy back in at the right moment.
“By staying invested through the market cycle, you give your portfolio a chance to recover and you’ll have an easier ride psychologically as well,” he adds.