This is a rough year for the FTSE 100, but some companies have been hit particularly hard. The worst five performing stocks on the index this year have plummeted between 22% and 45%, according to new research from Hargreaves Lansdown. If any of them are sitting in your portfolio, it is too late to undo the damage by selling. Or is there worse to come?
Emerging Woes
Aberdeen Asset Management (LSE: ADN) is one of the UK’s leading emerging markets investment fund specialists, a fact that stood it in good stead until recently. It is down 22% this year due to the sell-off in China and other emerging markets, and fears over what a US rate hike will do to countries that have loaded up on dollar-denominated debt.
Fund managers are a geared play in the instruments they specialise in, so traders can expect more blood on their screens until emerging markets stabilise. It may enjoy short-term respite if the Chinese authorities step in to calm panicking investors, but I think it is too early to pile back in, as I expect further aftershocks even after today’s quakes have calmed.
Weary Group
Weir Group (LSE: WEIR) is exposed both to the flailing oil and gas sector as well as stricken mining markets, and is down 26% year-to-date as a result. First-half profits before tax fell 40% to £108m, driven by a 55% fall in the US shale rig count, whose drillers use the Glasgow-based manufacturer’s pumps and equipment.
Saudi attempts to drive US shale rivals out of business appear to have failed, however, as plucky wildcats drillers cut costs and come back for more, so all is not lost. Weir is investing in R&D, widening its product range and making acquisitions to help diversify, as well as cutting costs. It also boasts strong aftermarket sales. This could be a great contrarian play if you pick the right moment.
Copper Hits Bottom
You won’t be surprised to hear that the worst three performing stocks on the FTSE 100 this year are all mining companies, and you already know the reason: China. Copper miner Antofagasta Holdings (LSE: ANTO) is down 26% year-to-date, with most of the damage done in recent weeks.
While most miners have responded to slumping prices by ramping up production, Antofagasta has been hampered by disruptions to its operations and shipment delays. Copper is the bellwether metal, and the economic weather looks far too stormy for me to buy the stock right now. Especially given its relatively meagre 2.48% yield.
American Way
Anglo-American (LSE: AAL) has had an even worse time of it, with its share price down 36% this year. At least its yield is far juicier than Antofagasta’s, at almost 7%. But with first-half earnings before interest and tax down 36% and net debt of $13.5bn, you have to wonder how sustainable this is.
Cost-cutting, disposals and greater capital discipline are the time-honoured response to a crisis, but management doesn’t foresee any immediate reprieve from current volatility, and neither do I. This is what buying opportunities look like at the time. Are you feeling brave?
Rotten Core
Investors in Glencore (LSE: GLEN) have been hit hardest of all, with the stock down 45% so far this year. And that was calculated before a sharp drop of more than 5% on Monday morning. Management claims Glencore is “by far the most diversified commodity producer and marketer”, but that has only left it exposed to a wider range of woes. Chief executive Ivan Glasenberg is still a firm believer in the China story but few others are right now. If you want to be lonely together, Glencore’s 7.5% yield offers some comfort.
