Blog: looking back/looking forward
With the FTSE 100 ending the year at very similar levels to where it began and increased global economic uncertainty having a dampening impact on business confidence and investment.
Here are the key themes that permeated the market in 2014:
Tough market conditions for the IPO market
2014 witnessed a resurgence of IPOs in the first half of the year but, with the market turbulence, the windows of opportunity (for launch) were squeezed, causing announcement congestion. This was the case with Saga and Virgin Money and caused a degree of ‘flotation fatigue’ within the market and prompted questions about how companies are valued. One IPO that bucked this trend was the Chinese retailer, Alibaba. When it was initially offered in September it became the biggest IPO in history and went on to become one of the most bought international stocks by TD investors – a title it held onto throughout the rest of the year.
Britain’s biggest retailer entered into troubled times
Tesco faced one of their most challenging years to date. Through a series of profit warnings and a very public FCA investigation, Tesco’s share price slid dramatically throughout the year reaching a low of 184p (at the time of writing), down from 330p as at January 3. TD investors, however, appear to have embraced the turmoil as an investment opportunity: Tesco has been one of most bought stocks at TD every month since July.
UK adults were confused by new pension rules
2014 has also been a year of major, and welcome, legislative changes. The removal of stamp duty on AIM shares in April, made investment into the diverse range of small businesses that make up this index even more appealing.
Of even more impact was the pension changes announced by the Chancellor, which allowed investors significantly more freedom in how they use their pensions. While this was an important step for British savers, research carried out by TD Direct Investing in September suggested consumers still need support. Nearly seven in ten consumers said they needed more advice about how to make the most of their pension pot. Clearly, more work needs to be done in 2015 to educate and empower consumers on how to get the best results from their savings.
Stock winners of 2014
– Luxury retailers: Jimmy Choo stepped into the FTSE 250 index for the first time in December, following the share price rising by 20% in less than two months. Mulberry finally showed signs of recovery after six months in the red and Alibaba, home of some of the world’s most prestigious fashion brands, launched one of the year’s biggest IPO’s.
– Technology: Apple was consistently one of the most bought stocks by TD’s customers in 2014, and continues to be one of the most popular brands in the world. In addition, other tech companies, such as Facebook have dominated international traders’ activities, as technology firms benefit from the improving economic outlook.
Losers of 2014
– Supermarkets: This has been a challenging year for the supermarket industry, which saw the first fall in grocery sales in 20 years. While Tesco’s profits fell dramatically, its rival Sainsbury’s also had some well-documented challenges in 2014, recording a loss of nearly £300m, resulting in its share price falling from 374p to 242p.
– Oil Companies: The dramatic, and unexpected fall in oil prices, has caused a slump in the sector’s share prices. Investors appear to have lost confidence in these stocks, as seen by the departure of Leni Oil and Gas from TD’s monthly top ten most bought shares in November.
What does this all mean for 2015?
There will be continuing uncertainty in Global markets reflecting the political landscape and slow economic growth outlook. At the forefront of this is the upcoming UK elections and turbulence in the Eurozone (in particular Greece and Russia).
However, within this, there is a continuing opportunity for more active investors to review and optimise the make-up of their portfolios to achieve their own investment objectives.
One thing that is clear; with the continued low interest rates, continuing influence of the Retail Distribution Review (RDR) and upcoming changes to pensions there is no better time for investors to take action on safeguarding their financial futures.