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Breaking the 8,500 barrier for the first time, FTSE 100 shares rose sharply on Friday (January 17).
On one level, this seems strange. UK growth figures continue to disappoint, with the economy slowing from April 2024. In addition, inflation remains above the Bank of England’s 2% target. And earlier this month, the yield on 30-year government bonds hit a 26-year high.
It seems that things are getting worse and there is speculation that the Chancellor may have to call for an emergency budget to fix another ‘black hole’ in the nation’s finances.
It really does seem very depressing out there!
And the UK’s biggest listed companies are now attracting higher value than ever before.
What’s going on?
In my opinion, this prospect reflects the global nature of the FTSE 100.
It is true that the UK economy is not ‘going’ at the moment. But it is estimated that 75% of the income of the companies in the index is earned abroad.
This means that they are not particularly dependent on one area and are less affected by one set of economic indicators.
On the contrary, it is more focused on the home FTSE 250 remains 15% below the all-time high, reached in September 2021.
And the best performer in the FTSE 100 last month, illustrates this point.
Doing it right
As of December 17, 2024, he is participating Airtel Africa (LSE:AAF) is up 17%. And the secret of its recent success may be that this group finds nothing outside of Africa. The threat of ‘Trump spending’ will not affect the party.
On 30 September 2024 (H1 25), it reported 156.6m customers in 14 countries, an increase of 6.1% compared to the previous year.
During H1 2025, revenue was up 19.9%. However, this is calculated using a fixed exchange rate (constant currency). Real income was 9.7% lower, mainly due to the weak performance of the Nigerian naira.
Fluctuating exchange rates reflect one of the difficulties of doing business in this part of the world. It’s also a very competitive industry and the infrastructure required can be expensive.
But despite these risks, the company is attracting the interest of a large investor. On 27 December 2024, a company closely linked to one of the company’s non-executive directors, Shravin Bharti Mittal, bought £15.75m worth of shares. It now makes the Indian Continental Investment share just under 16%.
And in the telecommunications industry, Africa seems to be the place to be right now. During H1 2025, Vodafone – which derives 20% of its revenue from the continent – reported a 9.9% increase in service revenue in the region.
Over time, economic growth in Africa may outpace the rest of the world. And as money rises, consumers may have more to spend on things like cell phones.
Good news
As someone who owns FTSE 100 stocks, I welcome the new high. But I’m not too impressed. I think the stocks in the index that are likely to do well over the next 12 months are those that are less dependent on the UK economy, such as Airtel Africa.
But as I think the group is well positioned to benefit from the expected growth in the continent, I already own Vodafone shares and do not want more exposure to the sector.
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