High hopes for 2015 that were battered by China

TO USE a football cliché, 2015 was a dramatic year of two halves. It began well, following the January announcement of a major stimulus package from the European Central Bank, which set markets alight.

For four months they sailed on the crest of a wave of robust economic data, record low interest rates and a mergers and acquisition boom, before being blown completely off course by a tempest from Beijing.

The Footsie blue chip index of 100 leading shares rose above 7000 for the first time in history, recording a peak of 7103.98 in April.

But the commodity rout and widespread uncertainty before US interest rates were hiked for the first time for almost a decade in mid-December, saw it end more than 12pc, or 861 points – almost £300bn – below the high, at 6242.32.

Its 5pc fall on the year is the worst performance since the 2008 financial crisis and follows 2014’s 2.5pc decline. UK stocks lost almost £460bn in value in little more than six months.

The Footsie fared better than the main market in Madrid, which fell more than 7pc, but it lagged well behind double-digit gains in Italy and rises of more than 9pc in Germany, France, China and Japan. Investor optimism remained skyhigh in the early months but many baled out as a hung parliament looked a certainty in the General Election. But the Conservative Party’s slim victory was greeted with euphoria.

A spectacular rally was also witnessed by Chinese company shares in April and May, buoyed by an easing of monetary policy.

Its Shanghai Composite Index, which had risen by 150pc in the 12 months to June 2015, was due a correction but the fall of almost 33pc in a matter of days from a peak in June left dealers and markets traumatised. The meltdown hit the Footsie badly. A total of £3.8trillion was wiped from global stock markets after China devalued the renminbi in August. Nerves were frayed further when The People’s Bank of China intervened repeatedly in forex markets to bolster the currency’s value, apparently spending £130bn.

The fragile Footsie fell for ten straight days – a streak unseen since January 2003. Mining stocks, more than 7pc of the Footsie, took an absolute pasting in sympathy with depressed commodity prices.

ANGLO American, which traded at a high of 1678p in May 2014, ended the year 76pc down and will need to sell assets. Heavyweight oils also came under intense pressure as the price tumbled to seven-year lows.

Brent crude recently slumped below $37 a barrel, the lowest since December 2008, after oil cartel Opec decided not to cut production.

Dealers sighed with relief after the Fed raised US interest rates – by 25 basis points – for the first time in almost a decade. Shares on both sides of the Pond rallied.

Neil MacKinnon, economist at VTB Capital, said: ‘We think the Fed will raise rates by another 25 basis points in March 2016. Given it is a US presidential election year, the opportunity for the Fed to raise rates thereafter is limited.’

UK interest rates have remained at a record low of 0.5pc since March 2009. Some economists reckon Mark Carney and his team at the Bank of England will begin to focus on a May 2016 hike.

Corporate financiers have coined it in 2015, with a possible £15.8bn banked if pending deals reach a conclusion. Wait for the furore over City bonuses next year.

Deloitte, the professional services firm, estimates that a mindboggling £3.24trillion worth of deals were announced.

December brought news that chemical giants Dow and DuPont were holding £92bn merger talks and that came hard on the heels of US Viagra maker Pfizer announcing the purchase of Irish botox maker Allergan for £106bn – the biggest ever bid in the pharmaceutical industry.

Dealers had also raised their glasses to AB InBev’s £67bn offer for Peroni brewer SABMiller.

Royal Dutch Shell also made a £52bn takeover bid for BG Group. Deloitte reported that the 28 main-market flotations had outperformed the Footsie by 21pc.

Worldpay, the payments processor, has been a success and is now trading with the Footsie’s big boys.

Small has once again proved beautiful. As the oil majors succumbed to the depressed oil price, speculative stocks found favour.

After striking oil in Texas, buyers chased Pantheon Resources. The stock takes the year’s gold medal with a spectacular gain of 618pc.

Construction and property development company Formation Group soared 483pc.

Demand increased after the board in September forecast that annual profits would be substantially in excess of the £1.75m anticipated. Dealings in 3Legs Resources were suspended in early November after jumping 433pc following news that Jim Mellon, the multimillionaire entrepreneur and investor, had joined the board of the Polish shale gas tiddler. He has a reputation as a company doctor. Oracle Coalfields rose 366pc after investors responded to signs of progress towards the reinstatement of its mining lease in Pakistan.

Shares of stockbroker Daniel Stewart have been frozen since October after climbing 365pc after Rob Terry, the former boss of scandal-hit Quindell, acquired an 8.75pc stake.

The wooden spoon goes to television services provider Peer TV. It crashed 99.88pc and the board has undertaken a review of operations.

SOME investors also switched off Motive TV, down 98.5pc following the board’s warning about its future. Perhaps the biggest casualty of the commodity price crash is Lonmin. It plummeted 96pc on the decline in the platinum price but was also hit by a damaging strike that forced it to close its mines for five months.

The world’s third-largest platinum provider required a rescue £267m rights issue.

Minnow Jersey Oil & Gas slipped 95pc before being swallowed by Trap Oil.

Golden Saint Resources also slumped 95pc after the diamond and gold exploration company said that it was struggling to access further funding.

A notable casualty too was LGO Energy, which fell 92pc.

It will forever be remembered for costing England Rugby World Cup team’s kit man Dave Tennison his job.

He advised three players to fill their boots – they did and then... crash! They fell out of bed in a big way, nursing hefty losses.

The biggest losers among the Footsie constituents were miners. Anglo American and Glencore fell 76p and 73pc respectively, while BHP Billiton lost 48pc and Antofagasta 45pc.

But stocks exposed to UK consumer spending performed well. Housebuilders Berkeley Group and Taylor Wimpey rose around 40pc.

As for 2016, Panmure Gordon’s chief economist Simon French says: ‘The light on the horizon is continued lower energy costs and the wave of investment expected in low carbon energy solutions following the Paris climate agreement.

‘We expect the Footsie to remain trading in a band between 5750 and 6250 throughout 2016.’

Be lucky!