Comment: The Post-Lehman Landscape

This week marked the anniversary of the demise of US investment banking giant Lehman Brothers and the collapse of insurance behemoth AIG, two events that threatened to bring about the implosion of the world's financial system. Yet, here we are, a year later and the UK's major stock indices have struggled their way back above the levels they were at in mid-September 2008.Small Is BeautifulThe All-Share is up 6.47% from a year ago while the blue-chip index, the FTSE 100, is up 6%. Surprisingly, given that the credit crunch was supposed to be more of a threat to smaller companies, the performance of the FTSE Small Cap index has been better still, up 10%, while the FTSE Fledgling index, which consists of companies listed on the main market that are deemed too small to be in the All-Share index, has stormed 29.33% higher.The star performer among FTSE Fledgling constituents has been recovery play Triad Group. The IT services firm virtually broke even in the year to 31 March 2009, bringing an end to a sequence of three years of losses. It's up 157% over the last 52 weeks but it is still down 42% over the last five years, and has yet to fully recover from the loss of credibility it suffered after it sacked its chief executive officer in December 2005 for blowing the whistle on certain irregularities in the company's accounts.At the other end of the scale White Young Green has lost nine-tenths of its value since September 2008. The engineering consultancy has struggled to cope with its mountain of debt and warned that any refinancing is likely to substantially dilute the holdings of shareholders.Sector ViewWere I asked to nominate the worst performing sector since the fall of Lehman's then I would have chosen Banking, but surprisingly, the sector does not figure in the five worst performers. Just as surprising, the safe and boring Gas, Water and Multiutilities sector does feature in the bottom five. The likes of United Utilities and Severn Trent are down by more than a third and a quarter respectively. Partly that is because of trepidation over what the water regulator Ofwat has in store for utility companies. However, it also reflects a renewed appetite over the last six months for 'near death experience' companies such as the heavily indebted house builders and pub groups.Down in the cellar with Utilities over the last year have been General Industrials (Drax -41%) , Electronic & Electric Equipment (Rexam -23%), Automobiles & Parts (GKN -22%) and Real Estate (Land Securities -37%). Working on the reverse gravity theory that what goes down must come up, the car and property sectors are probably going to feature in a future article as best performing sectors, but as ever getting the timing right will be the tricky part; there certainly seems to be some evidence of industry veterans calling the bottom of the property market but the climate in the car market is harder to judge because of the distorting effect of the car scrappage scheme.Evidence to support the theory that the UK property market is at or near the bottom comes from the likes of AIM-listed London & Stamford, run by a trio of men best-known for selling Pillar to British Land for £811m. Before Pillar, the management team founded and subsequently sold Arlington Securities to British Aerospace for £278m in 1989.Floated on AIM in November 2007 the company waited 14 months before making its first purchase and recently (in July) raised £226m through a placing and open offer to build up its war chest.Top of the TreeAt the top of the scale the top five sectors betrays a tech bias: Technology, Hardware & Equipment; Industrial Metals; General Retailers; Software & Computer Services; Personal Goods.Among the best performing tech stocks are Pace, the set-top box maker riding the wave of digital TV, and Imagination Technologies, the chip designer benefiting from the evolution of the mobile phone into a device that takes pictures, tells you where you are, gives you access to the web, plays your favourite tunes and, for all I know, cooks you breakfast.The presence of General Retailers in the list is a bit of a surprise given the credit crunch, the decline in consumer sentiment and the burgeoning threat posed to bricks and mortar retailers by the Internet. Certainly the likes of Curry's and PC World owner DSG, DVD and books seller HMV and computer game specialist Game Group have been hit by the latter, but the poor performance of these is more than offset by the strong showing by the likes of department store Debenhams, fashion retailer Next and DIY outfit Kingisher.One of the best performers in the sector, however, is quasi-pawn shop Cash Converters, up 120%, which could almost serve as a social comment on Britain in the post-Lehman era.