Scottish FTSE shares soared 40% in fourth quarter

A strong final quarter of 2020 saw shares in listed Scottish companies outperform the wider FTSE and AIM All Share indices as they soared 29.61% in Q4, according to analysis from Brewin Dolphin.

Shares in Scottish companies had previously lagged the FTSE indices, but following a 40.58% gain between October and December, they finished 2020 ahead of them all, with the exception of the FTSE 250.

Scottish firms listed on the AIM index rose 19.69% in the fourth quarter.

Among Scotland’s FTSE constituents, Baillie Gifford’s Scottish Mortgage Investment Trust finished the year with by far the largest gain at 110%, with the fund benefitting from the rising values of many of its technology holdings including Tesla and Amazon.

Scottish companies on the AIM index saw their share price increase an average of 29.13% for the whole of 2020, while the wider index saw a 20.74% increase in value.

Meanwhile, Scottish shares on the FTSE averaged a share price loss of 10.51% for the whole of 2020, compared to -14.34%, -12.99% and -12.26% for the FTSE 100, FTSE 350, and FTSE All Share, respectively.

The FTSE 250 registered a lower decline of 6.38% over the same period.

Omega Diagnostics, the Alva-based life sciences company, saw its shares end the year up nearly 350% as it re-positioned itself to provide Covid-19 testing.

However, the company’s shares fell nearly 18% between October and December having earlier in 2020 been up around 650% on the start of the year.

Braveheart Investment Group saw its share price rise 180% in 2020, while Linlithgow’s Calnex, the telecommunications test and measurement company, saw its shares rise sharply following its initial public offering (IPO) at the beginning of the fourth quarter, gaining nearly 150% by the end of 2020.

Calnex’s IPO was Scotland’s first for around two years.

Scotland’s listed transport and financial companies were among the worst performing shares for the year — but they did stage big recoveries in the fourth quarter.

Stagecoach saw its stock market value drop 54% during 2020, while airport company John Menzies and transport giant FirstGroup saw declines of 44% and 41% respectively.

NatWest-RBS and Glasgow-based Virgin Money also saw their shares finish the year down around 30%.

However, all of these businesses saw their share prices sharply climb in the fourth quarter, with gains ranging from 58% for NatWest-RBS to 131% for John Menzies.

John Moore, senior investment manager at Brewin Dolphin, said: “Shares in Scottish companies have reacted in much the same way as the wider markets, albeit with a level of amplification which reflects the smaller overall constituency and concentration that can come from this.

“Financial and energy companies were among the hardest hit by the effects of the pandemic and are disproportionately represented among Scotland’s FTSE constituents, which saw the average Scottish share price lag indices in the first half of 2020.

“However, we also saw the flipside of that towards the end of the year, when their share prices surged on the back of successful Covid-19 vaccinations, the US presidential election, and other macro factors.

“Still, while there are reasons to be optimistic, many of these companies remain challenged and the introduction of further lockdown measures are a reminder that there is still some way to go for many of them.

“Scottish Mortgage has ridden the tech wave over the last year, particularly buoyed by the substantial rise in the share prices of electric car makers Tesla and NIO.

“The trust provided a reminder to many investors that a combination of a permanent capital structure and a clear, long-term investment vision can win significant buy-in.

“Interest in Omega Diagnostics peaked with its signing of contracts with the UK Government – but concerns over the accuracy of its Covid-19 tests saw its share price drop in the second half of the year and work is required to rebuild confidence and maximise its opportunity.

“Calnex has performed exceptionally well since its IPO, underlining the benefits that can come from a public listing and the appetite for tech stocks – particularly with exposure to 5G.

“As an investment manager, we create portfolios that manage risk by providing exposure to a range of geographies and sectors, as well as themes that capture areas of growth within the global economy.

“Over the next 12 months we expect to see the polarisation that marked 2020 continue to take hold, while M&A in the UK should also maintain its momentum – Scottish companies could be among them, as we saw last year with Indigovision.”

Bod Buckby, head of UK primary markets – North, at London Stock Exchange Group, said: “The strong performance of Scottish companies over 2020 is a testament to the resilience and adaptability of these businesses and their employees.

“Scotland is well recognised as a home for innovative life sciences and technology companies, and this is reflected in the outperformance of Scottish companies compared to wider indices.

“The IPO of Calnex showed that investors in London are ready to welcome Scottish growth businesses to the public markets, in what was one of the most successful AIM flotations of 2020.

“We expect more to follow.”

About the Author

Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.