The Market in 2008: Year of turmoil brought City grandees low

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The Independent Online

With two and a half trading days to go before Christmas, this week, instead of looking ahead, we are peering over our shoulders to work out who fared the best and was left behind in the London market in 2008.

Overall, it has been a year of losses: the FTSE 100 is down a depressing 33.6 per cent, while the FTSE 250 has lost over 41 per cent of its value since January. Recession and the paucity of credit have played havoc with stocks across the sectors. But some have managed to weather the storm better than others.

The banks fared the worst as writedowns went from bad to worse to unsustainable and wholesale funding dried up, forcing some of the grandest of City grandees to seek help from the taxpayer or find solace in the arms of a better-funded foreigner.

The FTSE 350 banking index is down 60 per cent in the year to date, according to Bloomberg data, with HBOS down 91 per cent and Royal Bank of Scotland down over 88 per cent. In other changes, some famous names have left the market, while others are about to merge to avoid more pain. Alliance & Leicester now belongs to Spain's Santander, which also owns parts of Bradford & Bingley (the other parts remain nationalised), while HBOS is set to become part of Lloyds TSB.

Yet despite its casualties, the banking sector only just managed to win the wooden spoon. The miners retreated by almost 58 per cent as metals prices, under pressure from the spectre of recession and slackening demand, nosedived after hitting intoxicating highs earlier in the year. A tougher operating environment precipitated a wave of cutbacks in production and capital expenditure. Big-name losers include Lonmin, which turned down an offer from Xstrata and is down almost 74 per cent, and Rio Tinto, which was left to its owns designs after BHP Billiton abandoned its bid and is down just over 73 per cent. Xstrata is down almost 82 per cent while BHP Billiton has lost over 20 per cent of its value since January.

The oil price has also fallen off a cliff, depressing the oil & gas producers by around 18 per cent.

Elsewhere, the FTSE 350 general retail index weakened by over 46 per cent, buckling as consumers tightened their purse strings and credit insurers reined in cover for suppliers. Woolworths and SCS Upholstery were the biggest names to leave the market. Of the remainder, PC World-owner DSG International and Carphone Warehouse were among the hardest hit; the former lost over 83 per cent of its value, while the latter slumped by 74.17 per cent.

Falling property prices haunted real-estate related issues, with Mapeley, down over 95 per cent, joining the infamous ninety per cent club.

Similar problems bore on the domestic housebuilders, some of whom also had to contend with debt-laden balance sheets. The FTSE 350 household goods index, which includes the leading housing stocks, is only down around 29 per cent since the beginning of the year. But the index is skewed as it is dominated by Reckitt Benckiser, the FTSE 100-listed consumer goods giant, which fared relatively well, losing 12.53 per cent. The biggest housebuilder, Persimmon, on the other hand, slumped by more than 70 per cent. It wasn't the worst off, however. Barratt Developments fell back by almost 84 per cent while Taylor Wimpey, which remains locked in negotiations to rework the terms governing its debt pile, retreated by 93.7 per cent.

The media index lost close to 34 per cent of its value amid concern about the impact of smaller advertising budgets as companies rein in their spending commitments. Group M, a division of Sir Martin Sorrell's WPP group, anticipates global advertising spending in measured media to drop for the first time since 2001 in the next 12 months.

David Montgomery's debt-laden Mecom Group was the loser here, slumping over 98 per cent. Johnston Press, publisher of The Scotsman and Edinburgh Evening News, also struggled, falling by an eye-watering 93.9 per cent.

There is a silver lining to this story. The pharmaceuticals & biotechnology index managed to gain almost 5 per cent, with AstraZeneca rising over 26 per cent and BTG, the FTSE 250-listed speciality pharma group, advancing by a spectacular 53.23 per cent. The two succeeded in offsetting lacklustre performances from the likes of Shire, down 12.88 per cent, Genus, down 15.15 per cent, and Hikma Pharmaceuticals, which slumped by almost 32 per cent.