By Philip Lawlor, managing director, Global Markets Research
Looking at the performance of the FTSE 100 Index and the FTSE 250 Index over the last 12 months shows that both markets have been badly impacted by the coronavirus sell-off; the FTSE 100 has incurred losses of 30.7% compared to 41.1% for the FTSE 250 since the February 19 peak.
FTSE 100 vs FTSE 250 (Rebased, TR)
Source: FTSE Russell. March 19, 2020. Past performance is no guarantee of future results. Please see the end for important legal disclosures.
The difference in performance between UK large and small companies can be seen by looking at their relative performance over the last 12 months and comparing this against sterling. What the chart highlights is the inverse relationship between sterling and the performance of the FTSE 100 Index. As the chart below shows, the severe depreciation of sterling has had a devastating effect on the performance of the FTSE 250 Index, whose smaller companies are more domestically focused, than on the globally focused larger counterpart of the FTSE 100 Index.
FTSE 100 relative to FTSE 250 (Rebased, TR) vs GBP Real Effective Exchange Rate (Inverted)
Source: FTSE Russell. March 19, 2020. Past performance is no guarantee of future results. Please see the end for important legal disclosures.
Explaining the performance differential between the FTSE 100 and FTSE 250 by reviewing the sector-weighted contributions since February 19 peak
Source: FTSE Russell. March 19, 2020. Past performance is no guarantee of future results. Please see the end for important legal disclosures.
Examining the sector contributions to the total return between the FTSE 100 and 250 since the market peaked in February 19 highlights clear sectorial differences between the two indexes. For the FTSE 250, financials is the standout underperforming industry, which alone contributed to over 40% of the total negative performance, followed by industrials. By contrast, the sectorial contributions for the FTSE 100 were much more broad-based, although financials and oil and gas led the underperformance.
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