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Did you pick the FTSE 100 winners in 2012?

Fri, 28th Dec 2012 09:00

Let's be blunt, 2012 has been a real stinker in terms of the one thing markets crave most: certainty.Shocks have come from left, right and centre in 2012 as investors swung wildly between 'risk on' and 'risk off' modes.On top of that, trading on the London Stock Exchange was very light by historical standards, exacerbating some rises and falls, while limiting expected rallies.So here's the information that would have been terribly useful to have had 12 months ago, as we round up the best and worst performers on FTSE 100 in 2012. Best PerformersAt the beginning of 2012 the main worries surrounding the UK banking sector included the Vickers report, Basel 3 requirements, and ongoing shocks to the European sovereign debt market.Those are some pretty hefty worries.So perhaps a surprise winner in terms of rising shares price was Lloyds Banking Group. It's shares were up around 80% in 2012 as the group made meaningful progress in de-risking its balance sheet over the year.Of course Lloyds, like its peers, has had to set a lot of money aside for Payment Protection Insurance mis-selling and potentially other regulatory surprises.Michael Hewson from CMC Markets points out the bank is less exposed than its peers to the problems in Europe meaning the potential for further upside remains much higher.This has been reflected in the share price movement in the last few months, breaking above its March highs and hitting its highest levels since July 2011."The current uptrend should remain in place while trend line support from the August lows remains intact at 44.75p," Hewson says.But Richard Hunter, head of UK equities at broker Hargreaves Lansdown, offers a timely reminder that there's still a long way to go.He notes the share price of Lloyds is still some 80% lower than it was in the glory days, five years ago.No so far away, in sector terms, Hargreaves Lansdown shares have leaped around 65% in the year-to-date.Joe Rundle, head of trading at ETX Capital, says Hargreaves enjoys a unique positioning in the UK savings market - helped by its Vantage 'investment supermarket', a strong cash position and long term structural drivers of growth.Just behind, Aberdeen Asset Management shares are up around 62% for the same period, with traders noting it is a financially strong company with double digit earnings per share growth.Whitbread shares have performed strongly, up 55.3% after boasting strong growth from its Costa coffee business, as well as steady growth in its hotel arm.Rundle says: "The pub business is probably the weaker unit out of Whitbread's operations but it seems markets have faith in new management team to restructure the business in 2013".Worst PerformersIn increasing order of ignominy, let's move on to the stocks that have not rewarded their owners this year.Richard Hunter says 2012 was the year that general risk aversion and an uncertain outlook in China removed some of the pent-up demand that had served the mining sector so well in recent times."Casting our minds back a year, the debate surrounding the miners was whether they were in the midst of a 'super cycle' or quite simply, had they become overpriced," he says."Some investors have therefore taken some of their profits which built up over previous years." Anglo American is a good example, with shares off around 23%, hit by slowdowns in demand from both India, China, and Europe."With a new CEO due next year, investors are hopeful a change in leadership could turn around the miners' fortunes," says ETX's Rundle."That said, the shares are trading at a premium to their peer group and investors are likely to remain unconvinced over the company's story until a new CEO takes over and makes the market think otherwise," he warns.BG Group, the natural gas company, is off around 25%, which comes as a surprise to no one after downgrades to production and earnings guidance over the past year. The share price has struggled to recover since the firm announced it was reducing its growth outlook in late October.This is another company with a new CEO preparing to make his mark and investors will be waiting to see whether the new man, Chris Finlayson, can instil confidence.As the list of poorest performers progresses, so does the pain of the diggers.Mining giants Evraz shares are down by around a third across 2012 and Eurasian Natural Resources Company nearly double that, dropping 58% during the same period. "For Evraz, the stock is highly leveraged and cyclical given the slowdown in global economic growth, thus the underperformance of the stock," says Rundle."Furthermore, the lack of visibility over the company's strategy gives investors little faith in the company."For ENRC, the rise in the company's new debt worries the market. "ENRC's net debt has increased from approx $150m in the first half of 2011 to around $3.8bn by end of the third quarter of 2012," Rundle says. "Analysts expect net debt to increase further due to capex, acquisitions and also settlements for the company's African copper business," he adds."Further increases in net debt is likely to push the miners' shares lower in the year ahead."Looking to 2013Despite apocalyptic warnings to the contrary, it seems that 2013 will arrive after all.But it will hold is, frankly, anyone's guess.At the time of writing the US fiscal cliff was still hanging over the markets.Many of the other big themes that haunted the markets in 2012 are still there, including where Europe is headed and what might happen to the Chinese economy.There are lots of commentators who say this could be the ideal time to switch into riskier stocks, while there is still 'blood on the streets'.They say economies are on the mend and policy makers have shown themselves more than happy to step in if necessary.But there are plenty of others who will say this is madness, particularly as US politicians stagger towards the fiscal cliff.The only thing we know for certain is it's anyone's guess.Best of luck.The information in this article is purely for information purposes and should not be taken as investment advice.

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