How have UK stocks performed since the Brexit vote? | KPMG | UK
Share with your friends

UK stocks – how have they really performed since the Brexit vote?

How have UK stocks performed since the Brexit vote?

KPMG analysis shows a divergence in performance between companies primarily focused on the UK market and those focused overseas.


Also on

So far major UK stocks appear to have defied pre-referendum predictions with the FTSE outperforming expectations since the vote. Most market watchers and participants agree this is thanks to the fall in sterling since 23 June as a number of the UK’s largest companies generate a large portion of their revenues in dollars (which now buy more pounds).

Sharp exchange rate movements are clearly having a significant impact on equity markets and with Donald Trump set to take office early next year, a number of elections taking place in Europe, as well as the triggering of Article 50 on the horizon, we could see further market volatility ahead. But how much of the UK market performance is due to the exchange rate fluctuations and how much is dictated by investors’ appetite for UK stocks?

To shed some light on how we expect to see UK equities perform in the coming weeks and months, KPMG has developed two stock indices that illustrate the stark difference in performance between domestic and globally focussed companies.

The KPMG Non-UK50 is made up of the UK’s largest listed firms that derive more than 70% of revenues from abroad, while the KPMG UK50 includes the largest listed firms from the FTSE 100 and 250 that derive more than 70% of their revenues from the UK alone. Chart 1 below shows the performance of these two indices over the six months since the Brexit vote.

Source: KPMG analysis, Bloomberg, Capital IQ and Thomson Reuters Datastream

Commenting, Yael Selfin, Head of Macroeconomics at KPMG in the UK, said: “Six months since the Brexit vote UK stocks have picked up overall, but KPMG analysis shows a divergence in performance between those companies primarily focused on the UK market compared to those focused primarily overseas.

“Plotting their performance since 23rd June, the KPMG Non-UK 50, which represents the largest companies with more than 70% of their market outside the UK, is up 20%, while the KPMG UK50, which represents the largest FTSE companies with over 70% of their market represented by the UK alone, is down 6%. Put in pounds and pence, this equates to a £226 billion rise in the value of the KPMG Non-UK50 and a £24 billion loss for their domestic equivalent.

“The strong performance of our FTSE Non-UK50 index highlights the importance for businesses to diversify their earnings internationally, especially during times of uncertainty on home turf. At the same time, the performance of our FTSE UK50 index has picked up over the past month and is now well above where it was in the immediate aftermath of the referendum. This suggests that it is not all bad news for those businesses more domestically focussed and that investors are still finding opportunities within the UK market.

“The latest GDP figures point to a strong UK economy which has probably accounted for some of the pick-up in equity prices overall since the referendum. However, looking ahead we could start to see weaker consumer spending as inflation starts to bite which in turn may impact our indices in 2017.”

Putting both indices in a global context and rebasing them in dollars, takes even more of the sheen off the performance of UK stocks – regardless of whether earnings are more domestic or globally focussed.

As the chart below illustrates, in dollar terms, the KPMG Non-UK50 is down by 1% and the KPMG UK50 index of domestic stocks is down 23%. By comparison, the FTSE all world US$ Price Index had risen 4% over the same period. 

Source: KPMG analysis, Bloomberg, Capital IQ and Thomson Reuters Datastream

Karen Briggs, Head of Brexit at KPMG in the UK, added: “Our UK50 and nonUK50 indices show a dramatic difference in the fortunes of firms who earn their way overseas and those who sell in the UK.  And that change could become still more pronounced as foreign exchange hedges unwind through 2017.

“Of course, Brexit is not only about foreign exchange.  We are working with companies, large and small, throughout the country in all industries to help them plan for Brexit scenarios, look for opportunities and mitigate possible threats.

“There’s no one size fits all model on where to focus attention.  For some, workforce might be the biggest concern.  For others it could be import and export changes, and still others will be thinking about tax, or changes to regulation.  No two businesses have the same exposure when it comes to Brexit.”


Notes to editors

In order to create these indices KPMG analysed the annual accounts of every company in the FTSE 100 and FTSE 250 to calculate the proportion of their revenues originating in and outside the UK.

Companies that earned over 70% of their revenues inside Britain were classified as ‘UK companies’, while those that derived less than 30% were deemed ‘non-UK’.

These companies were then ranked by market capitalisation (as of 23 June) and the 50 largest companies included in each index. The indices were weighted by market cap and calculated using the change in market cap of each company over the period from 23 June to 22 December 2016.

Both indices were rebaselined to 100 on the date of the referendum, in line with the FTSE 100 calculation methodology.

The number of companies selected for each index took into consideration the range of sectors that are included in each index.

For media enquiries only, please contact:

Jess Liebmann, KPMG Corporate Communications

Tel: 0207 311 3245 

Mobile: 07551 135778 


KPMG Press Office: +44 (0)207 694 8773

About KPMG 

KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 13,500 partners and staff.  The UK firm recorded a revenue of £2.07 billion in the year ended 30 September 2016. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 152 countries and has 189,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  Each KPMG firm is a legally distinct and separate entity and describes itself as such.

Connect with us


Request for proposal