FTSE 100 and FTSE 250 Quarterly Review – September 2017

After market close on 30 August 2017 FTSE Russell confirmed the following changes to the FTSE 100 and FTSE 250 indices. The changes will be implemented at the close Friday, 15 September 2017 and take effect from the start of trading on Monday, 18 September 2017.

FTSE 100

Joining: NMC Health [NMC], Berkeley Group Holdings [BKG]

Leaving: Royal Mail [RMG], Provident Financial [PFG]

FTSE 250

Joining: Royal Mail [RMG], Provident Financial [PFG], Alfa Financial Software Holdings [ALFA], 888 Holdings [888], Sequoia Economic Infrastructure Income Fund [SEQ]

Leaving: NMC Health [NMC], Berkeley Group Holdings [BKG], Northgate [NTG], Petra Diamonds [PDL], Carillion [CLLN]

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Shares that like/dislike July

Shares that like July

The following table lists the five FTSE 350 shares that have the best returns in July over the last ten years. For example, Greene King has an average return of 7.3% for the month of July. Each stock has risen in July in nine of the past ten years, while Greene King is the only FTSE 350 stock to have risen in July for all the last ten years.

Company TIDM Avg(%)
Pace 17.6
Greene King 7.3
Brown (N) Group 6.7
Wetherspoon (J D) 5.2
Dairy Crest Group 4.7

Shares that dislike July

The following table lists the two FTSE 350 shares that have the worst returns in July over the last ten years. For example, Petra Diamonds has an average return of -6.6% for the month of July. Both stocks have fallen in July in eight of the past yen years.

Company TIDM Avg(%)
Petra Diamonds Ltd -6.6
Man Group -1.6

An equally-weighted portfolio of the above strong July stocks would have out-performed every year an equally-weighted portfolio of the above weak July stocks by an average of 12.4 percentage points each July for the past ten years.

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Shares that like/dislike May

Shares that like May

The following table lists the four FTSE 350 shares that have the best returns in May over the last ten years. For example, Cranswick has an average return of 4.6% for the month of May. Each stock has risen in May in at least eight of the past ten years.

Company TIDM Avg(%)
Babcock International Group 6.0
Cranswick 4.6
3i Group 4.1
Severn Trent 3.6

Shares that dislike May

The following table lists the five FTSE 350 shares that have the worst returns in May over the last ten years. For example, Taylor Wimpey has an average return of -11.0% for the month of May. All five stocks have fallen in May in at least eight of the past yen years.

Company TIDM Avg(%)
Taylor Wimpey -11.0
Petra Diamonds Ltd -8.4
Workspace Group -4.9
Sainsbury (J) -3.6
Stagecoach Group -3.3

An equally-weighted portfolio of the above strong May stocks would have out-performed every year an equally-weighted portfolio of the above weak May stocks by an average of 10.8 percentage points in May for the past ten years.

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The Stock Market in July

After a usually disappointing May and June, shares tend to perform a bit better in July, but not by much. July ranks 9th of all months for performance. On average the market increases 0.8% in July, with a probability of a positive return of 55%.

The accompanying chart plots the percentage performance of the FTSE All Share Index for each July since 1982. For example, last year in 2012 the market rose 1.2% in July. In the last 20 years the market has risen 11 times in July.

The market has risen on the first trading day of July 69% of years since 1984 – making it the strongest first trading day of any month. And the strength has tended to continue for the first week of trading (making it one of the strongest weeks in the year). After that, the market has a propensity to drift lower for a couple of weeks until finishing strongly in the final week of the month.

Sectors and stocks

Although this may not be an exciting month for the overall market, there can be a fair degree of divergence of performance at the sector level. Historically the sectors that have been strong in July are Chemicals, Personal Goods and Real Estate Investment Trusts while weak sectors have been Gas, Water & Multiutilities, Support Services and Beverages.

At the stock level, the following companies seem to like July: Experian, Greene King, Imagination Technologies, and Senior – these shares have risen in at least nine of the last ten years in July (Greene King is the only FTSE 350 stock whose shares have risen every July since 2003). While the two worst performing shares in July over the last ten years have been Petra Diamonds and Serco.

IPOs

July has been the most active month for flotations; over 50 of the companies in the FTSE 350 Index have had their IPOs in this month. (Perhaps this is to allow company founders to go shopping for yachts in the summer months?) One such July IPO was for Antofagasta which floated on 5 July 1982; coincidentally, in recent years July has been the best month for the company’s shares. The longest-listed company with a July flotation date is one of the odder companies on the LSE – Law Debenture Corporation.

Diary

The date to watch this month is 4 July when the MPC interest rate announcement will be made, and the New York Stock Exchange will be closed (Independence Day).

Article first appeared in Money Observer.

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Shares that like/dislike July

Shares that like July

The following table lists the four FTSE 350 shares that have the best returns in July over the last ten years. For example, Greene King has an average return of 6.6% for the month of July. Each stock has risen in at least nine of the past ten years in July – Greene King is the only stock in the FTSE 350 whose shares have risen every July in the past ten years.

Company TIDM Avg(%)
Experian 3.4
Greene King 6.6
Imagination Technologies Group 7.2
Senior 6.0

A portfolio of these four stocks would have out-performed the FTSE 350 Index in July in nine of the last ten years with an average out-performance of 4.4 percentage points each July.

Shares that dislike July

The following table lists the two FTSE 350 shares that have the worst returns in July over the last ten years. For example, Petra Diamonds has an average return of -5.8% for the month of July. Both stocks have fallen in at least eight of the past ten years in July.

Company TIDM Avg(%)
Petra Diamonds Ltd -5.8
Serco Group -2.6

 

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