2019 has felt like a more peculiar year than most. A lame-duck government under Theresa May was continuously frustrated over Brexit leading to fears the hard-left Jeremy Corbyn, with his threats to nationalise great swathes of industry, would become Prime Minister. Only at the under of the year with a general election won by the Conservatives has any semblance of political stability been established.
If you looked for trouble this year you didn’t have to try hard to find it. Although remarkably a post-election Santa Rally has the FTSE 100 up over the course of this tumultuous year.
The collapse of the Neil Woodford empire which is still causing misery for many investors was probably the biggest story of 2019. The ramifications extended beyond a narrow band of well-off investors and even managed to capture the attention of MPs. The collapse has affected Hargreaves Lansdown (LSE: HL) which supported Woodford right to the end and kept him of its buy lists which have huge influence.
Other investors have been hit by the collapse of mini-bond firm London Capital & Finance which is a scandalous affair. Troubles at Sirius Minerals and woes on the High Street also will have hit many ordinary investors hard this year despite the good run for the market overall in December.
Here’s a roundup of some of the biggest investing news stories from the year:
January – first out the blocks after the New Year celebrations was the retailer Next (LSE: NXT). A surge in online sales over Christmas helped the group to provide some new year cheer to investors after a more difficult trading period. Following this, the shares went onto be one of the top performers in the FTSE 100 over the course of the year.
February – this was another massive story. Sainsbury’s (LSE: SBRY) had pinned huge hopes of rivalling Tesco’s market share by merging with Asda. Its boss had staked his reputation on the tie-up, only for the Competition and Markets Authority to indicate that the deal was unlikely to be approved. In April the final decision confirmed the worst fears of Sainsbury’s and the deal was indeed blocked.
March – after the collapse of Carillion in January 2018 many people feared the worst for other outsourcers, especially Interserve. In March the outsourcer went into administration. Interserve ran into financial difficulty after delays and cancellations to key construction projects, as well as an unsuccessful foray into waste-to-energy projects that left it with huge debts, requiring refinancing to avoid failure.
Also in March, Ted Baker (LSE: TED) shares started to decline after the founder of the company was forced out following accusations of a culture of forced hugging. Since then the company has had a series of profit warnings and executive departures.
April – shares in retailer Laura Ashley (LSE: ALY) hit an all time low. It issued a warning over its full-year results amid difficult trading conditions. It had just warned in February that low consumer spending meant its 2019 performance would miss market expectations. The shares finished the year worth 2p each, valuing the fashion retailer at £15m.
May – many private investors will have been hit hard when Vodafone (LSE: VOD) took an axe to its dividend, cutting it by 40%. It was the first time the telecoms operator had to cut its dividend in its history as it faced numerous headwinds including ballooning debt.
June – finally the pressures on the Woodford funds became too much. Woodford was forced to block investors from withdrawing money from his flagship £3.7bn fund on 3 June, as it racked up losses on stock market bets that turned sour, damaging its performance. It was finally suspended when Kent county council asked for the return of £263m. The criticism of Woodford mainly centred around the large number of illiquid (hard to sell) small and unlisted companies he held in a fund that was supposed to be income-focused.
July – this was a month littered with failings. Perhaps the biggest of all was the delay of Sports Direct’s results. Ironically now called Frasers group it has been one of the best performers in the FTSE 250 this year. At the time the firm cited uncertainty about trading its House of Fraser chain.
Just as people were starting to enjoy their summer holidays there were horrible results from both Aston Martin holding company Aston Marin Lagonda (LSE: AML) and utility company Centrica (LSE: CNA), owner of British Gas. The former’s shares crashed by almost a quarter after the luxury car manufacturer lowered production targets, just a week before its half-year results were due. Concerns over whether the car manufacturer could hit its own targets alongside the possibility there may be a need to raise capital hit the shares.
For Centrica – one of the worst performers on the FTSE 10 during the year – the problems are potentially even bigger. In one day, the company revealed its boss would leave, the group swung to a loss for the first half of the year and it slashed shareholder payouts. The dividend was cut by 58% showing just how severe the problems are at the company which has lost over 1m customers.
August – in a usually quiet month of the year there was a lot of activity, much of it damaging for investors. There was the collapse of SVS Securities – a situation which has still not be resolved as the year draws to a close. The share prices of Amigo (LSE: AMGO), Sirius Minerals (LSE: SXX) and Burford Capital (LSE: BUR) all took a pasting for different reasons. Over on the FTSE 100 infighting at HSBC led to the boss of the bank stepping down.
Firstly at Amigo, the shares plunged more than 50% after it warned growth would come to a halt due to a looming crackdown by regulators and the rising risk of an economic downturn sparked by a no-deal Brexit.
At Sirius Minerals, shares plummeted 25 per cent as the firm announced it had suspended a planned $500m (£411m) bond sale intended to finance a mine on the North York Moors. The offering was an important part of the company’s financing package for the Polyhalite mining project.
Thirdly, ligation financier Burford Capital shares fell sharply after an attack by short seller Muddy Waters. Burford hit back quickly and accused the US hedge fund of making “false and misleading” claims that wiped more than £1bn off its value, and warned the accusations could amount to market manipulation.
September – the woes of investors in Sirius Minerals carried on after the summer. In September the half year results revealed that Sirius would slow down the pace of development at its Woodsmith mine in North Yorkshire and admitted that it would need to secure additional external financing in order to allow it to continue operations after 31 March 2020.
October – another major takeover failed. This time the target was happy about the outcome. The Hong Kong Exchanges and Clearing (HKEX) abandoned a £32bn takeover of the London Stock Exchange (LSE: LSE) after being “unable to engage” with management on the deal. The takeover would have derailed the London bourse’s own $27bn (£22bn) deal to buy financial data provider Refinitiv.
November – tobacco shares which had had a terrible year continued to suffer in the penultimate month of the year. A backlash against vaping in US has dented revenue growth at the cigarette-maker British American Tobacco (LSE: BATS). Health concerns emerged centred on sometimes fatal lung injuries. Those concerns, as well as others about underage vaping, were enough to catch the attention of the US President Donald Trump.
Investors in BAT however welcomed strong sales of traditional cigarettes in the US and globally.
December – one of the best performing FTSE 100 shares of 2019, sports fashion retailer JD Sports (LSE: JD), saw its shares fall in early December as majority shareholder Pentland slimmed down its stake in the company. Before this the shares had been doing well because JD Sports has provided resilient to tough high street conditions, posting a 47 per cent rise in revenue in the first half of the year.
Causing a headache for management and investors just before Christmas, Muddy Waters launched its second big attack on a UK company in 2019, this time on NMC Health (LSE: NMC).
The short seller – which makes money from a falling share price – accused the Middle East operator of private hospitals of manipulating its financial statements in order to cover up the true extent of its debt. The hedge fund also harbouring “serious doubts” about the company’s asset values, cash balance, reported profits.
So there you go that’s a quick roundup of 2019. Wishing you all the best for 2020 and that it’s another year that sees the market rise.