Shares Over the Year: FTSE 100 a distant memory for housebuilders

Housebuilders left the FTSE 100 in one of a string of changes to the London market in 2008.

A drastic collapse in the value of the sector's biggest companies ensured that not a single one managed to keep its place among the blue chips. Taylor Wimpey left in March, followed by Persimmon in June.

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The departures are a testament to the steep decline in sector share prices as mounting concern about the fate of the housing market and a growing aversion to debt sapped investor confidence.

Since moving down from the FTSE 100, Taylor Wimpey, which remains locked in talks to renegotiate the terms governing its debt pile, has moved down from the FTSE 250 to the FTSE Small Cap index.

The stock has shed more than 93 per cent of its value over the past 12 months while Persimmon, which has held on to its place among the mid-caps, is down 71.28 per cent.

Besides the prestige attached to the FTSE 100, index constituents benefit from the attention of large tracker funds, some of which invest exclusively in blue-chip companies.

In the media sector, ITV, down 53.45 per cent, was ejected from the benchmark in September as investors turned away, leaving just five media companies, including BSkyB and WPP, in the index.

But the concerns about the pace of the slowdown in the global advertising market and, in some cases, refinancing needs were most evident on the FTSE 250.

Three of the best known media stocks on the market – Trinity Mirror, Johnston Press and David Montgomery's Mecom – moved down to take a place among the small caps after a review deemed the trio too small to warrant a place on the mid-cap index.

Trinity is down by 84 per cent since last January, while Johnston Press and Mecom both joined the infamous "90 per cent club", shedding 94.06 and 97.92 per cent of their value respectively.

One market source said: "2008 has been very, very hard on companies that have any sort of exposure to things like housing and advertising because sentiment in those sectors has really taken a beating.

"The appetite for risk was just not there after we got through the summer."

Equity strategists at Cazenove made a similar point in a recent year-end round-up, highlighting the rush among investors to sell out as the economic storm clouds gathered overhead.

"As investors have started to anticipate an impending adjustment in profitability, forward-based valuations have fallen accordingly," they said.

"The uncertainty surrounding the outlook for equity markets is likely to persist, in our view, and the high level of volatility can be expected to continue as the macro environment continues to deteriorate."

Retailers, often considered to be at the frontline of the economic storm, were hit as the market grew more risk-averse.

Reports charting the fall in consumer spending hit Carphone Warehouse – down 74 per cent over the past year – which was booted out of the FTSE 100 in September.

Home Retail Group, which owns Argos and the Homebase home-improvement chain, was kicked out in June, but returned to the index after the December review.

Besides the index changes, the retail sector has also witnessed some departures from the stock market of which Woolworth's was the most prominent.

The miners have also had a rough 12 months. After touching record highs earlier in 2008, commodities prices collapsed in the second half of the year, forcing a number of companies to cut back on production and capital expenditure.

Lonmin was a prominent victim. The miner, which lost more than 70 per cent of its value, was demoted to the FTSE 250 as falling platinum prices, production cuts and Xstrata's decision to abandon its bid for the group depressed sentiment around the stock.

For all its problems, however, Lonmin was by no means the worst. International Ferro Metals, for example, shed almost 87 per cent of its value and was relegated from the FTSE 250.

Randgold Resources bucked the sector trend, however, ending the year with gains of almost 60 per cent. The company was boosted by investors seeking to increase their exposure to gold, ending up in the FTSE 100 after the latest index review.

The banking sector, although the worst performer in terms of percentage declines, fared better in that it managed to hold on to its blue-chip status.

But a number of constituents departed, including Alliance & Leicester, which was taken over by Santander, and Bradford & Bingley, part of which was also sold to the Spanish banking group with the remainder being nationalised.