Turbulent political year ended well for investors
ALL told, 2019 was a pretty good year for investors. The FTSE All Share has returned 19 per cent and, despite the headlines, it hasn’t been that volatile.
After the drama at the end of 2018, the stock market got off to a strong start, surviving a prime minister’s resignation, no-deal cliff-edges, trade wars and a General Election. Over all of that has loomed the Brexit question, and after a turbulent year, markets jumped as the Brexiteers scored a decisive victory.
We’ve taken some casualties, though. Debenhams’ shares were suspended on April 9 after a slow decline. The day after floating on the stock exchange in May 2006, shares peaked at £2.07, and by January this year you could pick them up for 5p. Rental costs lay at the heart of the problem. Debenhams owed its landlords £4.3billion over the next 20-plus years. Given it had just posted a pre-tax loss of £492million, this was too heavy a burden.
Thomas Cook lasted until September 23. Again the problem was debt, and the group was unable to reach a deal with its creditors.
Investors have also enjoyed several exciting IPOs in the US this year, some of which have done better than others. Digital taxi firms Uber and Lyft have disappointed investors, both down around a third since launch. On the other hand, Beyond Meat is up over 200 per cent – but they were up over 800 per cent not too long ago.
The biggest IPO of the year was Saudi Aramco, Saudi Arabia’s national oil company. The plan was to list in London or New York with a $2trillion (£1.54trillion) valuation but, when Western investors baulked, Aramco listed on the Saudi exchange instead.
Perhaps the most important IPO of the year was one that didn’t happen.
Co-working office provider WeWork aborted its IPO plan as investors grew sceptical of its loss-making business model and charismatic founder.
Time will tell whether WeWork burst the unicorn bubble, but it certainly looks like investors are getting more wary.
“This article is designed for investors who make their own decisions without advice. If unsure whether an investment is right for you, you should seek advice. Shares can rise and fall in value so you could get back less than you invest.”