Brewin Dolphin: Scottish FTSE companies suffer in 2020
Scottish companies listed on the FTSE index underperformed the market in the first half of the year, as the coronavirus pandemic had a significant impact on the economy, according to analysis from Brewin Dolphin.
The wealth manager found that Scottish organisations on the FTSE averaged a share price loss of -30.72% between January and June 2020, compared to -18.61% and -18.52% for the FTSE 350 and FTSE All Share. The FTSE 100 and 250 fell -17.98% and -21.62% during the same period, respectively.
Scottish shares on the AIM index fared slightly better, dropping -7.03% in value compared to the index’s -7.85% fall. There were four fewer Scottish companies starting the year on AIM, following the acquisitions of Eland Oil & Gas, Murgitroyd, and Faroe Petroleum, along with the de-listing of Goals Soccer Centre in 2019. That became five when Indigovision was purchased by Motorola this year, with the company’s shares subsequently removed.
Only one of the 19 Scottish-based constituents of the FTSE saw its share price increase in the first six months of 2020: the tech-focused Scottish Mortgage Investment Trust, which gained +41.97%.
Scotland’s transport companies lost the most value, with John Menzies (-73.62%), Stagecoach (-62.78%), and FirstGroup (-59.85%) representing the bottom three.
Shares in life sciences company Omega Diagnostics saw the biggest gain of Scottish businesses listed on AIM between January and June, nearly trebling from 14.4p to 41.7p (+189.58%).
Indigovision’s acquisition at 405p per share came at a significant premium to their 175p value at the start of the year, making it the second highest gainer.
Braveheart Investment Group (+27.00%), Lansdowne Oil & Gas (+8.00%), Smart Metering Systems (+3.72%), and Scotgold (+3.65%) were the other companies to see gains in value. Meanwhile, fashion retailer Quiz saw its share price fall -65.87%, while oil and gas services business Plexus Holdings saw a drop of -57.94%.
John Moore, senior investment manager at Brewin Dolphin, said: “The performance of shares in Scottish companies has reflected what is going on in the wider market – tech and life sciences have held up or even seen their value increase, while more traditional, economically sensitive sectors have suffered.
“Among our listed businesses, there is more of a bias towards the latter, with some emerging success stories in the former. Our advice is always to have a good spread of investments, to manage risk and limit exposure to any particular area.
“Along with transport companies, the COVID-19 sell-off saw big drops in the share prices of banks and oil and gas firms – both of which make up a reasonable portion of Scotland’s PLCs. It’s also unsurprising to see STV on the list, with a great deal of uncertainty over advertising budgets; particularly from travel companies, which account for a lot of marketing spend during peak times of the year.
“Scottish Mortgage Investment Trust and Omega Diagnostics, by contrast, capture a lot of what has driven the partial recovery in global stock markets – the feeling that technology and biotech companies have seen their prospects accelerated and are going to become even more important and valuable in the years ahead.
“It is good to see Scotland participating in these sectors and they should act as an invitation for more businesses of their type to capture growth and perhaps look to the public markets as a way of raising capital to facilitate their strategies.”
- Read all of our articles relating to COVID-19 here.