Newspaper article The Evening Standard (London, England)

Spot the Stars among the Cinderella Stocks

Newspaper article The Evening Standard (London, England)

Spot the Stars among the Cinderella Stocks

Article excerpt


THE headlines may have shrieked stock market doom over the past month, but it is not as bad as you think. There is plenty to cheer about in sector performance.

While the Footsie 100 index has plunged a nasty 11% in the first half of this year, and is nearly 20% below its level of a year ago, half the sectors on the stock market have risen and two-thirds, 23 out of 34, have soundly beaten the market.

Investors picking the right sectors bucked the downward trend and made decent profits in the half year to the end of June.

In the best traditions of sector performance, the winners in 2002 are 12 sectors that are relatively unglamorous, old-fashioned and defensive, which bombed for much of the 1990s - what some call the "Cinderella" sectors.

They are tobacco, food, drink, personal care, metals, defence, paper, car components, building, property, textiles and transport.

They have all been to the ball this year with gains ranging from 6% to nearly 30%.

Tobacco seems an unlikely winner, with cigarette consumption falling in this country and multibillion dollar lawsuits in America, but it has been a star three years running as investors have been attracted by rising income from the Big Three, British American Tobacco, Imperial and Gallaher.

The same can be said of personal care and metals, which have been boosted by solid recovery scenarios at companies such as Reckitt Benckiser and Corus.

Others that have risen include steady old-fashioned sectors such as engineering, water, electricity, chemicals and oil. Yet another six sectors convincingly beat the market on its downward path by falling less than average. They are mining, gas, leisure, supermarkets, banks and stores. All have fallen less than 11%.

Once again, there is a strong defensive theme, relative lack of glamour and a sense of the pendulum swinging back from the pattern of the late 1990s.

The most important thing to do this year has been to avoid the 11 worst-performing sectors which, though few in number, drove the market sharply lower. …

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