FTSE falls by 3% as banks scrap dividends and bonus payouts

Another day, another big move in the stock market – is this the new normal?

Article updated: 1 April 2020 9:00am Author: Helal Miah

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  • As portfolio managers readjust their positions, some rays of sunshine are appearing with good numbers coming out from the Chinese manufacturing industry
  • 3% fall in the FTSE100 reflects falls in US and Asia and to events analysts warned were likely to happen a few weeks ago
  • Bank are also following PRA’s recommendation and have scrapped dividends and bonus pay outs
  • For those with cash on the side lines, it may be worth considering putting this to work by drip feeding slowly back into the market through collective investments.

The recent upward trend in the market may have come along as portfolio managers readjust their positions for the quarter end which was the worst since 2008. However, there are some rays of sunshine in the gloom with, good numbers coming out from the Chinese manufacturing industry. Unfortunately, there are also some horrible numbers from the UK and US yesterday regarding the number of victims to the virus, suggesting we will be in crisis mode longer than originally anticipated. Even Trump, who once dismissed the disease as a hoax, now acknowledges the dire conditions to be faced by America and things will not return to normal by Easter.

The 3%+ fall in the FTSE100 is a reflection of overnight falls in the US and Asia and to events that are happening which analysts warned were likely to happen a few weeks ago. As the days have gone by, we have seen more companies taking measures to cut costs and scrapping or delaying the dividends. What’s more poignant is that now the banks, in a concerted effort to keep liquidity going, have all followed the PRA’s recommendation and have also scrapped dividends and bonus pay outs. This is a welcomed decision, but also a payback to society who rescued the sector when they messed up in 2008.

At times of significant market moves, some investors are happy to sit tight and ride out the volatility while taking in the dividend income. Now they will be feeling the pain too as dividends across the whole market looks likely to be slashed. Despite this, we still believe that it’s best to stick with current equity allocations; we may not have reached a bottom but it is likely that we have already seen most of the losses. For those with cash on the side lines, it may be worth considering putting this to work by drip feeding slowly back into the market through collective investments.


All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

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Helal Miah

Investment Research Analyst

After graduating with an economics degree from University College London, Helal started his career within private banking at Smith & Williamson Investment Management and later held analyst and fund manager roles with the Industrial Bank of Japan, Schroders and Mitsubishi Corporation. He is a chartered fellow of the Chartered Institute for Securities & Investment. 

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