Fast forward to 1984, and Like a Virgin hit the radio waves. At the same time, interest rates in the UK hit 12% and the FTSE 100 was born. Things kicked off at 1,000 points on 3rd January 1984. It’s sitting at 7,550 today. Had I been more of a Material Girl and spent my £1 on the FTSE 100 instead of the Like A Virgin single, it would be worth £7.55. And over £9, if you factor in the dividends I would have received.
Just 28 of the original FTSE 100 shares are still in it today, and a look at the old names is like a trip down a nostalgic High Street. Midland Bank. BHS. Rowntree Mackintosh. Allied Lyons. The changes to the FTSE since inception are a clear indicator of how global we have become, of how traditional retail has withered on the vine and tech is taking over. Just 30% of the FTSE 100 companies’ revenues come from the UK today.
The international nature of the FTSE does make British investors more exposed to global upheaval. Clearly the focus this week is on the currency crisis in Turkey, and how that contagion is spreading to other emerging markets such as Argentina. The lira has lost more than 35% of its value against the US dollar this year, and recent economic drama unleashed by trade sanctions shows no sign of ending. Al-Jazeera’s news site - which I find interesting for alternative views - reports that the 'US dollar has been weaponised', and the dollar is 'knee-capping countries'. Globally emerging markets are having a rough year – the iShares Emerging Markets fund is down over 20% this year. Falls of over 20% are when a market officially enters bear market territory.
This week has been a stark reminder of the volatility of Emerging Markets. In Argentina, their MERVAL index has risen by about 900%, over the last 6 years. Yup that’s not a typo. But today the peso is weaker than it has ever been against the dollar, and things are looking fragile. Over in China, one of their three tech darlings Tencent, reported its first drop in profits for a decade this week. Chuck in currency turmoil, a commodity price rout, and the spectre of trade wars - and thoughts of any immediate recovery feel a bit Like A Prayer. Time to fasten your seatbelts, I suspect.
Have a great weekend everyone. I want to be where the sun warms the sky….but that seems unlikely!
PS With apologies to non Madonna fans. Normal service will resume next week.