Equity prices depressed by global, not UK, concerns

The decline and underperformance of the FTSE 100 has not reflected building concerns about the UK’s economic outlook but rather the impact of recent events in China. The FTSE 100 is comprised to a greater extent than most other advanced economy benchmarks of commodity producers which are particularly dependent on demand from China. The stronger pound has contributed to the FTSE 100’s underperformance too, since a relatively high proportion of the revenues of FTSE 100 companies are derived from abroad. By contrast, the FTSE 250, which is comprised of a higher proportion of domestically-orientated firms than the FTSE 100, has continued to fare much better than the latter.