£193bn added to value of top companies since Brexit vote

The FTSE 100, Britain’s benchmark share index, has seen its total value increase by £193 billion, helped by a sharp decline of the pound since the UK voted to leave the EU on June 23, reports The Independent.

Fears over the implications for trade, investment and Britain’s standing in global markets have knocked the pound down below $1.23 – a new 31-year low for the currency.

But the fall in the pound has pushed the UK’s benchmark index above its all-time high during a level to hit 7,129.83adding around £193 billion to the value of the FTSE companies since the EU referendum vote.

The index has risen 12 per cent, or 765 points, since 23 June.

The market capitalisation of the FTSE 100’s constituents is now about £1.9 trillion, up from around £1.7 trillion at the time of the referendum.

The decline of the pound has boosted the FTSE 100 as many of the multinational companies on the index make a significant proportion of their profits abroad.

A weaker pound makes also UK exports more competitive and some companies have reported a pick-up in overseas sales since the British vote to leave the EU in June caused sterling to tumble.

On Tuesday, the index has been boosted by retailers such as Next and Marks & Spencer, up 4.2 per cent and 3.1 per cent, respectively.

Anthony Cheung, of Amplify Trading, said: “The FTSE 100 printing a record high this morning comes as no surprise as the persistent depreciation of the GBP continues to support revenue streams from abroad.

“This of course in combination with luxury brands in London’s West End increasing prices to take advantage of a spike in foreign tourism.”

But Laith Khalaf, of Hargreaves Lansdown, said today’s new intraday record high is a “hollow victory” for the FTSE 100.

He cautioned: “The concern will be that a reversal in fortunes for the currency could see the gains wiped off as quickly as they appeared. That may well be the case, though it’s hard to see anything in the foreseeable future that’s going to propel the pound back to its former glory.”

Khalaf’s predictions about a quick reversal of fortunes maybe justified – the FTSE 100 has turned negative at 2pm, below 7,100, having touched an intraday record high of 7,129.83 just after midday.

Sterling has now fallen about 18 per cent against the dollar since referendum to lows not seen since 1985.

Bank of England policymaker Michael Saunders said on Tuesday he would not be surprised if the pound fell further.