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It goes without saying that 2020 has been a difficult year for everyone and the disruption caused by the COVID-19 pandemic looks set to continue into 2021.
This is equally true for the business world; while some companies have experienced an uplift in financial performance during COVID-19, many more have struggled to stay afloat.
This extraordinary situation has been reflected in the world’s stock markets, where share prices dramatically fell in March 2020 and have yet to fully recover.
After witnessing the volatility of the London Stock Exchange this year, we began to wonder: how has COVID-19 affected business performance at a regional level?
To answer this important question, we analysed our internal databases to compare the average stock performance of publicly listed companies in the biggest UK cities over the course of 2020.
Here’s what we discovered…
Where have public companies in England performed the best in 2020?
We began by taking a look at how the public companies in each of England’s regions have performed on the stock market over the course of the 2020.
The only region to have stronger returns in Q4 versus the start of the year is the East of England (with a small improvement of +1.46%). Since the initial drop of -24.09% in Q1, its recovery has been strong - the region’s numbers have gradually increased since Q1 end and it is now outperforming its year start levels, leaving the East of England far ahead of the rest of the country. Before the UK Government’s announcement of a second national lockdown in England in November, most of the East of England was categorised as Tier 1 with minimal restrictions on businesses, apart from hospitality. Additionally, the region is home to companies like Tesco and Ocado Group, both of whom saw a lot of growth due to the boom in online shopping since the start of the pandemic.
Interestingly, it seems that many of the North of England’s listed companies haven’t fared as well as their southern counterparts, with many experiencing a far slower return to pre-pandemic share price values. The country’s worst hit region is the North East: although it has seen some improvement since the end of Q1 (going from -32.76% to -23.72%), the region is still far off returning to pre-pandemic levels. Locally-based consumer cyclical companies like SCS Group, Vertu Motors and Greggs have all suffered thanks to decreases in spending confidence and disposable income during the pandemic.
Next, let’s delve deeper into data and find out how the companies of individual cities have performed.
Which UK cities’ public companies have performed the best in 2020 during the COVID-19 pandemic?
This data is based on the results of companies listed on the London Stock Exchange in 10 of the largest UK cities. Each individual company’s share price performance was analysed at the year start (1st Jan 2020) and at the end of every quarter to find the cumulative percentage change. Each city’s stock performance change at the end of each quarter was based on the median share price of all their publicly listed companies.
Sheffield turned out to be the city with the best-performing public companies since the pandemic. Despite that, its average still has yet to return to pre-pandemic levels (although it’s not far off, with a decrease of just 4.34% by the end of Q4). Examples of Sheffield’s best performers include ITM Power (renewable energy), Benchmark Holdings (biotech) and Fulcrum Utility Services (utilities).
At the other end of the ranking, Birmingham is in a very different position. The city is now doing better in comparison to its performance at the end of Q1 (when it was down 39.55%), but its average share price is still down 25% in Q4 – its companies have a long way to go before they return to their collective stock level performance at the beginning of 2020. One example is National Express, who are still down 52% in Q4 compared to Q1. The exception to this is the Birmingham-based Tandem Group, who have seen a huge 255% increase in Q4!
Taking a look at London specifically (split by all the boroughs that have multiple publicly listed companies), we can see that the picture is mixed in the Capital. Overall, the collective stock market performance of Greater London and the City of London is down by 10.32% in Q4 compared to the start of 2020:
However, the public companies of several of London’s boroughs have shown an overall share price increase compared to the start of the year. For instance, the average performance of companies from Kensington and Waltham Forest in Q4 versus the start of 2020 were positive, thanks to high-performing companies like Jubilee Metals and Online Blockchain.
The companies listed in the District of Hammersmith, in particular, have done well: like every other London district and borough studied, the average stock market performance in Hammersmith saw a large dip at the end of Q1, but since then it has improved every quarter. Some standout performers registered in the borough include Best of the Best, ECR Minerals and FeverTree.
Also notable is Lambeth’s performance across the year. As we’ve seen, most of London saw a large decrease at the end of Q1, followed by gradual recovery throughout the year. However, stock performance of companies in Lambeth have performed worse and worse throughout Q2 and Q3. As of Q4 things have started to improve, with the performance average having almost returned to Q1 end levels. But with a decrease of 35.79%, the borough isn’t anywhere near where it was at the start of the year. Local company Workspace has fared particularly poorly, with a Q4 performance of -43.2% versus the start of 2020.
Edward Croft, CEO of Stockopedia.com commented on the findings:
“Covid-19 brought the most volatile stock market environment we’ve seen in years, and with it some clear sector winners and losers. But the virus has also been hitting some regions harder and longer than others. This study shows the impact this has had on the typical company’s share price across regions, and the regional disparity is clear to see.”
Do these results reflect what you’ve seen since the start of the coronavirus pandemic, or have your experiences been different? Let us know in the comments section below. If you’d like to see the full dataset, click here.
Methodology
Stock market performance data was collected for 1,200 companies listed on the London Stock Exchange (excluding any companies whose registered address could not be found). Using year start data for 1st Jan 2020 (set at 0), we collected and analysed share price change at the end of each quarter in 2020 to find the percentage performance change.
Q4 data is based on the latest available data - share price change as of 23rd November 2020.
Any UK city/town with one or zero companies listed on the London Stock Exchange were removed from the city-focused datasets. The stock price performance of cities and regions was calculated using the median performance of their respective registered companies from year start (1st Jan 2020) to Q4.
About Ben Hobson
Stockopedia writer, editor, researcher and interviewer!
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*Past performance is no indicator of future performance. Performance returns are based on hypothetical scenarios and do not represent an actual investment.
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Hi Ben,
We think alike as for fun I produced the same kind of results earlier this month. I didn’t publish my findings but rather produced a pinpoint map with a “Scuttlebutt” idea called the Six-Degree Screener.
Six degrees of separation theory: Any person can be connected to any other person on the planet through a chain of acquaintances that has no more than five intermediaries. When I first came across this theory, I must admit to being doubtful of its truthfulness, but when I started to connect the dots, I changed my mind and starting to see the world in a smaller and more connected way.
This map of PLC companies which is a visual way to discover listed PLC companies in your location, and question how many degrees of separation there is between you and the knowledgable people within them.
Click here to view the map
To begin with, you might be unaware of any known links, but asking around friends and family might show closer connections than once thought, and it might just offer a new way to find investment ideas by connecting to local insightful people.
Thanks
Dan