Which stocks, sectors and markets have done best since the bottom of 23 March 2020?

“A fresh outbreak of COVID-19 in Shenzhen may be bringing back unhappy memories for many investors of two years ago but the Chinese authorities are already talking about measures to boost both their economy and stock market, just as the combination of fiscal and monetary stimulus did so much to calm Western share prices – the FTSE 100 bottomed on 23 March 2020 having shed 2,410 points, or a third of its value, in barely a month,” says AJ Bell Investment Director Russ Mould. “The UK’s headline share index has since surged by 45% from its low of 4,994, to show once more the benefits of patience, the dangers of second-guessing market sentiment and how stocks tend to be most attractively priced at the moment of maximum fear, as those who panic look to sell at almost any level.

“The list of the best – and worst – performers within the FTSE 100 since the COVID-inspired bottom of March 2020 do show some traces of the pandemic and lockdowns.

“Online gaming and high-street bookmaker Entain and Royal Mail are among the big winners, thanks to how the former helped to keep many entertained during the lockdowns and the latter delivered parcels and online shopping in ever-growing volumes. Among the losers, the postponement of elective surgeries for hip and knee replacements continues to hamper Smith & Nephew.

“The impact of the Russian invasion is taking over now, as can be seen in the collapse of Polymetal and Evraz, both of whom now face relegation from the FTSE 100, and the recent heavy declines in Coca-Cola HBC, as well as the gains made by the miners Glencore, Anglo American and Antofagasta as metals prices soar amid concern over the possible loss of Russian supply of key commodities an

“But stock-specific issues have a massive role to play, too. Entain and Meggitt both received (ultimately unsuccessful) bids to suggest their valuations were attractive and Entain has been riding the wave of the deregulation of betting markets in the USA. The US economic recovery, select acquisitions and market share gains have buoyed Ashtead and Ferguson.

“On the downside, political and economic turmoil in Hong Kong and a slowdown in China has hit HSBC, Unilever has failed to meet its profit margin targets and Reckitt Benckiser and Ocado – two firms whose business models were well adapted to the pandemic and lockdowns – have both struggled since the market bottom. Reckitt has been burdened by a dud acquisition in China, Ocado by growing competition, the need for increased investment and further delays in the long-awaited move into profit.

Source: Refinitiv data

“Stock specifics also have a key role to play in explaining the performance trends which have helped to shape the FTSE 350.

“Bids have also focused attention on Playtech and Spire while lower debt and improved profits have sweetened the outlook at Premier Foods. On the downside, TP ICAP’s $700 million acquisition of Liquidnet has caused its share price to spring a leak, Lancashire has been hit by storm losses and the combination of some poor fund performance and the impact of the war in Ukraine has left emerging markets debt fund manager Ashmore out in the cold.

Source: Refinitiv data

“Ashmore now offers a dividend yield of more than 7.5% and investors could be forgiven for looking at the worst performers and thinking whether it is time to take a closer look to see if any are worth buying, especially as the FTSE 100 has continued to lag on the global stage (even if it has held up relatively well so far in 2022, thanks to its commodity exposure.

Source: Refinitiv data

“Ultimately the US has still been the place to be, and its hefty weighting has helped to drag the FTSE All-World index higher, with only India showing America a clean pair of heels.

“The performance trends within US equities also show the importance of stock-specific research and the dangers of panicking (or becoming over-exuberant) at just the wrong moment – and valuation can be an invaluable guide here as it helps investors to spot what may be excess fear (and thus bargains) and excess optimism (and thus stocks that are potentially dangerous as so much good news is priced in that any minor upset could puncture the share price).

“Few industries took as big a beating as oil in early 2000 as the price of crude collapsed, investors embraced environmental, social and governance (ESG) criteria and shunned hydrocarbon producers and ExxonMobil was kicked out of the Dow Jones Industrials. Yet oil producers and oil equipment and service firms dominate the list of leading performers within the S&P500, despite the presence of cult stock, and electric vehicle maker, Tesla.

Source: Refinitiv data

“Rather like Dettol-maker Reckitt Benckiser in the UK, disinfectants and cleaning wipes maker Clorox has fallen from favour as investors have looked for ways to play the post-pandemic recovery and begun to fret about input costs pressures. 

“Perhaps even more surprisingly to some, Netflix is among then ten worst performers in the S&P 500 since the market bottom of March 2020. The shares more than doubled between the lows of spring 2020 and November 2021 but that surge left the firm with a market cap of more than $300 billion. 

“A disappointing fourth-quarter, weak net customer additions, rising competition and the increased cost of content production have all weighted heavily since and left that price tag looking exposed. Even after a near-halving of the market cap, Netflix’s $155 billion valuation still dwarfs analysts’ consensus forecasts for 2022’s sales and net profits of $33.4 billion and $5.1 billion respectively.”