Brewin Dolphin: Scottish companies outperform UK indices in Q3 recovery

John Moore

Scottish companies listed on the London Stock Exchange have outperformed their indices in the third quarter of 2020, according to analysis from Brewin Dolphin, buoyed by a strong performance from the country’s AIM constituents.

The wealth manager found that Scottish organisations on the AIM index registered an average share price gain of +18.72% between July and September, while the index saw a +8.69% increase in value.

Scottish companies on AIM are now up +16.22% on average for the first nine months of 2020, compared to a +0.15% gain for the junior market.

Meanwhile, Scottish shares on the FTSE averaged a share price loss of -1.40% between July and September 2020, compared to -5.18% and -4.01% for the FTSE 100 and FTSE All Share.

The FTSE 250 saw a slight gain of +0.95% over the same period, while the FTSE 350 lost -4.16%. With a -29.65% decrease in value for the year to September 30, however, Scottish companies remain some way behind the four main FTSE indices.

There have been some huge gains for AIM-listed Scottish companies in 2020. Omega Diagnostics, the Alva-based life sciences company, has seen its share price increase a massive +445% in the year to the end of September, rising +88% in the third quarter of 2020.

Braveheart Investment Group and Scotgold, the miner, have also chalked impressive gains of +240% and +123% since January, respectively. A dozen of Scotland’s AIM constituents saw their share prices rise between July and September.

Only two Scottish constituents of the FTSE have seen their value increase in 2020: Scottish Mortgage Investment Trust, the technology-focused fund, and sausage skin producer Devro – with gains of +71% and +4%, respectively. However, another seven saw their share prices rebound in the third quarter, taking the total in positive territory to nine between July and September. AG Barr, the drinks group; Alliance Trust; and Macfarlane Group, the packaging business, were among those seeing their valuations rise.

Perhaps unsurprisingly, the worst-performing shares for the year to the end of September have been transport companies and banks, with the bottom five made up by John Menzies, the aviation group; train and bus operators Stagecoach and First Group; as well as NatWest (formerly Royal Bank of Scotland) and Virgin Money (formerly CYBG).

John Moore, senior investment manager at Brewin Dolphin, said: “Scottish companies continue to reflect what has been happening in the wider market this year – there are stand-out performers in some areas, while sentiment remains very poor towards other sectors. After successfully adding new COVID-19 testing products to its offering, Omega Diagnostic’s shares have been on an incredible run since the pandemic began and were up more than 400% in the first three quarters. Braveheart Investment Group and Scotgold have also done very well, with triple-digit gains, the latter boosted by gold’s rise in value.

“Financials, oil and gas, and transport companies remain challenged by the measures brought in to curb the spread of COVID-19, and that will likely continue to be the case for some time yet. Property has been similarly hit and, as such, it’s unsurprising to see the likes of Spaceandpeople and Ediston still some way off where they began the year. Springfield has been dragged down by sentiment in the wider housebuilding sector; however, social housing is an area that has not been economically impacted and remains a key aspect of government policy. Its pure focus on this area has helped Sigma Capital.

“The addition of Calnex, the first Scottish IPO for a couple of years, will provide added intrigue for the final quarter of 2020. As we move further into the year, we’re beginning to see a clear polarisation among sectors and the acceleration of trends seen prior to the pandemic. As an investment manager, we look to create portfolios of investments that manage risk by providing exposure to a range of geographies and sectors, as well as themes that capture areas of growth within the global economy.”

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