After a turbulent month for UK stocks, it was a relief when the FTSE 100 index actually climbed last week. Despite falling almost 1.3% on Friday, the Footsie ended last week up almost 1%.
Recent market jitters have been driven by the collapse of three mid-sized US banks, as well as the emergency rescue of Credit Suisse, Switzerland’s second-largest bank.
With fears of financial contagion spreading across the globe, UK bank shares were particularly volatile last week. Hence, the stocks of all Big Four UK banks were down over five trading sessions.
The Footsie’s five biggest flops last week
Despite the turmoil in global stock markets, 38 shares in the FTSE 100 actually gained in value last week. These increases ranged from under 0.1% to 8.3%. Losses for the remaining 62 shares range from 0.1% to 9%.
For the record, there are the index’s five worst performers from last Monday to Friday:
| Company | Share price | One-week change | One-year change | Five-year change |
| Barclays | 133.9p | -6.0% | -20.0% | -36.1% |
| Land Securities | 573.8p | -6.8% | -26.3% | -39.4% |
| Kingfisher | 256.3p | -7.5% | -3.0% | -13.1% |
| British Land | 366.1p | -8.5% | -31.9% | -44.7% |
| Standard Chartered | 591.8p | -9.0% | +19.2% | -15.6% |
These five shares lost between 6% and 9% of their value in just one week. Also, with the notable exception of Standard Chartered, they have all declined over one year. And over five years, all five stocks look pretty sickly to me.
One thing leaps out at me from the above table. It is dominated by two FTSE 100 banks — Barclays (LSE BARC) and Standard Chartered — and two property developers/investors: British Land and Land Securities. Both of these sectors — banking and real estate — face similar strong headwinds right now.
First, rising interest rates cause bond values to fall, thus weakening banks’ balance sheets. However, higher rates mean higher interest income for banks, boosting their earnings.
Second, higher interest rates and weaker bank lending are putting huge pressure on commercial-property values. Also, changing work patterns post-Covid-19 and working from home are reducing demand for office space.
In addition, a growing credit squeeze is making refinancing existing property loans more expensive and difficult. Hence, some commentators are warning that, after recent bank wobbles, commercial property will be ‘the next shoe to fall’ in financial markets. Let’s see.
Which of these Footsie shares would I buy today?
As a long-term value investor, I’m always on the lookout for discounted, reduced and marked-down shares. Looking at the table above, one value share in particular stands out for me.
That stock is in £21.2bn bank Barclays, whose shares have crashed hard from their recent 2023 high. On 8 March, Barclays stock almost hit £2, before plunging almost a third (-32.7%) to close at 133.9p on Friday.
At current levels, Barclays shares offer a dividend yield of 5.4% a year, covered 4.1 times by trailing (historic) earnings. Of course, Barclays is set to have a much tougher 2023 than 2022. Even so, these numbers still look crazy to me — even after higher bad debts and loan losses.
For the record, if I had any cash to spare, I’d whack it all into Barclays shares right now. Then again, as I already own this stock in my family portfolio, I still stand to benefit from any future recovery in the Blue Eagle’s bank’s share price!
