How shares have sunk since the Tories won

ONE year ago today the Conservatives landed a major victory at the General Election. And since then, the UK stock market has tumbled by around 10pc.

A rout in the commodity sector, a slowdown in China and ongoing uncertainty around the EU referendum have meant a rocky 12 months on the FTSE.

But while David Cameron is not the only Prime Minister to preside over a shaky stock market in their first year after an election, research by The Share Centre reveals that since last May the market has been more volatile than any other postelection period since 1987.

On election day last year the FTSE All Share stood at 3276 points. Buoyed by the straight result, which avoided any protracted coalition discussions, it had jumped almost 100 points by the next morning.

But by the end of August it had fallen to 3245. Come December it had pulled back to 3525, before slipping further in February to 3046. By April it had climbed back to 3490.

The Tory party is generally considered to be good for the stock market because it is probusiness. In the lead-up to the election there were concerns about what a Labour win would mean for banking stocks in particular.

SO WHAT’S gone wrong? Richard Stone, chief executive of The Share Centre, says: ‘The certainty of the election result was quickly replaced by uncertainty surrounding the UK’s position in the EU, as well as growing uncertainty over the global economy, a sharp fall in the oil price, concerns over China, tensions in Syria, uncertainty as to the timing of the US interest rate increases and the US presidential election later this year. It has certainly felt like a roller coaster.’

The worst post-election year in recent history was under Tony Blair in 2001, just after the dot com bubble burst.

On June 7, 2001 – the day of the election – the FTSE 100 stood at 5948. A year later it had plummeted 1000 points to 4957 after the start-up internet businesses which had so excited investors began to falter.

Often remembered for its arduous winter, 1987 was also a year of discontent for investors. As Margaret Thatcher won a third term in office on June 11, 1987 the FTSE 100 stood at 2249. A year later it was down 11pc at 1849.

Ten years later in 1997 Tony Blair was elected as Prime Minister for the first time. It was the year the first Harry Potter book was published, the IRA declared a ceasefire and the Queen celebrated her 50th wedding anniversary.

None of those things account for the stock market soaring by 32pc. On May 1 the FTSE stood at 4445, and a year later it had rocketed to 5928.

Simon Evan-Cook, manager of the Premier Multi-Asset fund, says ‘the market tends to be more influenced by the global economy’. Oil and mining companies, for example, make up a large portion of the FTSE. They have been hit by crumbling commodity prices and a slowing Chinese economy – dragging down the UK stock market.

Evan-Cook says investors might have expected housebuilders to fair well under a Tory government. Instead the outlook for the property sector is looking less rosy after a stamp duty surcharge was introduced on buyto-let and second-home owners.

Evan-Cook continues: ‘Something which is a positive reflection on the Government, though, is how well UK smaller companies have done.’ He adds they ‘have been among the best performers over the past year’.

He likes the Franklin UK Smaller Companies fund, which has returned 7pc in the past year and 54pc over three years.

The fund invests in small, growing businesses such as technology group Servelec and industrial adhesive tape manufacturer Scapa. He also likes the Fidelity UK Smaller Companies fund, which has returned 4.6pc over the past year and 48pc over three years.

Manager Alex Wright is known for his contrarian approach of going against the crowd. Current investments in the fund include emergency home insurance and domestic repair firm Homeserve, and gambling and leisure business Rank Group, which is behind Mecca Bingo.