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Breaking via the 8,500-barrier for the primary time, FTSE 100 shares hit an all-time excessive on Friday (17 January).
On one stage, this appears a bit unusual. UK development figures proceed to disappoint, with the economic system flatlining since April 2024. As well as, inflation stays above the Financial institution of England’s 2% goal. And earlier this month, yields on 30-year authorities bonds hit a 26-year excessive.
Issues seem to have gotten so unhealthy there’s even hypothesis that the Chancellor might need to name an emergency funds to handle one other ‘black gap’ within the nation’s funds.
It actually does appear very gloomy on the market!
And but the UK’s largest listed firms now appeal to the next valuation than ever earlier than.
What’s occurring?
In my view, this optimism displays the worldwide nature of the FTSE 100.
It’s true that the UK economic system isn’t going ‘gangbusters’ in the meanwhile. But it surely’s estimated that 75% of the income of the businesses within the index is earned abroad.
This implies they aren’t reliant on one notably territory and are much less affected by one set of financial indicators.
In distinction, the extra domestically-focused FTSE 250 stays 15% under its all-time excessive, achieved in September 2021.
And the very best performer on the FTSE 100 over the previous month, illustrates this level.
Doing properly
Since 17 December 2024, shares in Airtel Africa (LSE:AAF) have risen 17%. And the key to its current success might be that the group doesn’t earn any income exterior Africa. The specter of ‘Trump’s tariffs’ isn’t going to have an effect on the group.
At 30 September 2024 (H1 25), it reported 156.6m prospects in 14 international locations, a rise of 6.1% from a 12 months earlier.
Throughout H1 2025, income was 19.9% greater. Nevertheless, this was calculated utilizing a hard and fast change charge (fixed forex). Precise revenues have been 9.7% decrease, notably as a result of weak efficiency of the Nigerian naira.
Unstable change charges do illustrate one of many difficulties of doing enterprise on this a part of the world. It’s additionally a extremely aggressive sector and the required infrastructure might be costly.
However regardless of these dangers, the corporate’s attracting the curiosity of a significant investor. On 27 December 2024, an entity intently linked with one of many firm’s non-executive administrators, Shravin Bharti Mittal, purchased £15.75m of shares. It now brings the stake of Indian Continental Funding to only below 16%.
And within the telecoms trade, Africa looks as if the place to be in the meanwhile. Throughout H1 2025, Vodafone – which derives 20% of its income from the continent – reported a 9.9% improve in its service income within the area.
Over the long run, financial development in Africa is prone to outpace the remainder of the world. And as incomes rise, customers are prone to have extra to spend on issues like cell phones.
Excellent news
As somebody who primarily owns FTSE 100 shares, I welcome the brand new excessive. However I’m not getting too carried away. I feel the shares within the index most definitely to do nicely over the subsequent 12 months are these which might be much less reliant on the UK economic system, like Airtel Africa.
However as a lot as I feel the group’s in place to learn from the anticipated development on the continent, I already personal shares in Vodafone and don’t need extra publicity to the sector.
