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Index IDEA: UK indexes hardest hit after Brexit vote

The UK market indexes tracking stocks deriving most of their revenue from the UK economy have been hardest hit in the two weeks following June 24, when the results of the UK referendum were first announced. UK indexes measuring more globally-oriented companies based or listed in the UK, on the other hand, have proven more resilient to the Brexit news.

In the last two weeks, the FTSE 100, measuring the 100 most highly capitalized blue chip companies listed on the London Stock Exchange, has risen more then 3%, while the FTSE 250 index, comprised of mid-cap companies outside the FTSE 100 and including constituents comprising approximately 15% of UK market capitalization, is down more than 8%.

In addition, the FTSE 350 Global Exposure Index, that looks at companies in the FTSE 100 and FTSE 250 that derive the majority of their revenue outside the UK, has risen 7.5% in the last two weeks, while the FTSE 350 Domestic Exposure Index, that looks at companies in these indexes that derive the majority of their revenues from inside the UK, has fallen nearly 18% for the same time period.

Mark Makepeace, CEO, FTSE Russell:
“Performance of the FTSE UK Index Series in recent weeks tells an instructive story. The FTSE 100 Index including multinationals which derive a large portion of their revenue outside the UK as well as non-UK companies listed in London, has proved more resilient to impacts from the fall of the British pound and shocks to the UK economy. The FTSE 250 Index, comprised of more UK-based businesses, more closely reflects UK-driven market trends in recent weeks. This global/local divergence is even more evident when examining the relative performance of the FTSE 350 Global and Domestic Exposure Indexes. This underscores the need for a variety of market measures to gain understanding, insight and perspective, particularly in times of global market volatility.”

The post-Brexit vote impact on the UK equity market is further illustrated in sector returns across the FTSE UK Index Series in the last two weeks:

  • Two weeks after the referendum  the Personal Goods sector in the FTSE 100 has risen 13.7%, while the same sector in the FTSE 250 Index has fallen by 12.4%.
  • Within the FTSE 250 Index, the Household Goods & Home Construction Sector has fallen nearly 37% in the last two weeks, while Construction & Materials companies are down 25%.
  • Within the FTSE 250 Index, the Mining sector has led in the two weeks since Brexit, rising more than 30%.

For a closer look at the FTSE UK Index Series, go to the FTSE Russell website.

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