UK’s top-performing stocks lag international rivals in 2022

The best-performing UK stocks in 2022 lagged their rivals in Asia and the US, despite the FTSE 100 outperforming other major international markets, findings show.

The top performers in the US, Japan and China returned twice as much as the top stocks of the FTSE 100, according to data from eToro, seen exclusively by This is Money.

Defense contractor BAE systems was the best performing stock in the FTSE 100 this year, up about 54 percent.

BAE Systems, a weapons manufacturer, has gained support in a year when Russia invaded Ukraine and global tensions rose.

Ben Laidler, Global Markets Strategist at eToro, said: “While the FTSE 100 may have lost ground in 2022, it performed well by international standards and ends the year as the best performing major international market.

However, as the data shows, the returns of the UK’s top performers pale in comparison to the returns of the leading US, European and Asian stocks when you dig a little deeper.

There is no single reason for this, but rather a multitude of factors that have held back UK listed equities this year. US oil stocks, for example, have not had to deal with punitive windfalls like BP and Shell in the UK.’

Within Britain’s blue-chip index, such as Pearson and mining giant Glencorean increase of 51 percent and 43 percent respectively.

After raking in bumper profits, stocks in oil giants Shell and BP have also performed strongly, up about 41 percent over the past 12 months.

owner of British gas Centrica Shares also performed strongly, up about 30 percent from a year ago. The company’s profits have soared, boosted by record high global gas and electricity prices, although the UK consumer arm British Gas has suffered at home.

Centrica will hand over £250 million to shareholders through a recent buyback program as high wholesale prices have put the company on track for a six-fold increase in net profit compared to last year. The group posted half-year profits of £1.34 billion in July.

But the performance of individual stocks in the FTSE 100 index dwarfs those elsewhere in the world.

In the US, for example, Occidental Petroleum Group, listed on the S&P 500, has seen its shares rise 115 percent over the past year, which is more than double the gains of BAE Systems, listed on the FTSE 100.

Even the tenth best performing US S&P 500 stock, APA Corp, saw its shares rise more than 60 percent year over year.

A similar picture emerges when examining equities in Japan and China. Japan’s ninth-best-performing large-cap stock, Isetan Mitsukoshi Holdings, has seen its shares rise about 58 percent, while China’s tenth-best-performing stock, Jinzhou Jixian Molybdenum Co, is up 118 percent over the period. years, according to eToro.

In China, Zhonglu Co, a manufacturer of bicycles, fitness equipment, motorcycles and mopeds, saw its shares rise 256 percent in that period.

eToro’s Laidler said, “If you look at Japan, the yen has fallen more than 17 percent against the dollar over the past year, boosting the competitiveness of its companies.

By contrast, the British pound has fallen by just 7% against the dollar over the past year, resulting in a much weaker impact for UK-listed companies.

And while the Chinese economy has slowed sharply this year, it is still growing at a much faster pace than the UK and has an inflation rate of just 2 percent.

Overall, however, the FTSE 100 looks quite attractive compared to its peers. Overall, it has benefited from a combination of cheap valuations, high dividends and an attractive sector mix of oil stocks and traditional defensive stocks, from consumer staples to healthcare.”

He added: “It is also worth remembering that stock markets are not economies and are not completely dependent on each other to thrive.

In fact, if global uncertainty remains high in 2023, the FTSE 100 should thrive. While the index’s attractiveness will equally decline as the global economy settles down, interest rates begin to fall and investors regain their animal spirit.”

In 2021, the FTSE 100 closed at 7384 points, having started the year at 6460 points. The FTSE 100 rose 14.3 percent in 2021, its best year since 2016.

Looking at the here and now, the blue-chip index was in positive territory for 2022 with a margin of 1.1 percent as of Thursday’s close.

On Friday, the FTSE 100 closed 0.05 percent or 3.73 points to 7,473.01. In the US, the S&P 500 is down about 20 percent over the past year.

A fairly weak pound helped the FTSE 100, which is full of oil companies, mining companies and pharmaceutical companies that earn most of their income in dollars but have sterling share prices.

Chris Beauchamp, chief market analyst at IG, said: “Unless US markets can stage some late rescue this afternoon, it’s going to be a rather sour end to the year for equities.

In such a difficult year for equities, it is an achievement for the FTSE 100 to finish more or less level for the year to date before Christmas, while others have suffered much more.

“But with the global economy facing a recession, there probably isn’t too much optimism heading into the new year.”