As most of us recognise, the FTSE has had a very good run since the June 23rd Brexit referendum. As I write these words, for instance, it's at 7,020 - up 11% on its June 23rd closing value of 6,338.
But some shares have done much better. Royal Dutch Shell is up 15% since the referendum, for instance. GlaxoSmithKline is up 16%. And HSBC is up an impressive 38%.
You don't need to be a genius to see why. In the hours after the referendum result, the pound slumped to a 30-year low against the United States dollar, crashing from $1.50 to $1.30 - a level from which it has since sunk even lower, to $1.22 as I write. Nor has sterling's performance against the euro been much better.
So naturally, the share prices of companies with substantial overseas earnings have risen accordingly. At HSBC, for instance, almost all the business's earnings are overseas, with just 4% of the bank's profits coming from the UK.
Good news, bad news
But critically, not all shares have soared in value.
Take a look at the chart below, which compares the FTSE 100 index with a relatively little-known index: the FTSE Local UK, which contains shares that derive over 70% of their earnings from the UK.
Source: FTSE & The Financial Times
Immediately after the referendum, as we can see, the FTSE Local UK plunged almost 30%, and is still down around 20% now. Moreover, look at how the two indices have diverged since the beginning of September, as markets have become increasingly concerned about the prospects of a hard Brexit.
Overall, as we see, in rough terms that's an overall divergence of 30% or so from the FTSE 100 since June 23rd.
Put another way, for those of us looking for bargains at a time when the FTSE 100 - in sterling terms, at least - is close to its all-time high, then the FTSE Local UK starts to look distinctly interesting.
The Brexit effect
Now, many of those shares will have been hit for good reason. Whatever your politics, and whichever way you voted in the referendum, it is clear that many businesses will be affected by a sudden 20% devaluation in the pound.
Likewise, as higher import costs feed into consumer foodstuffs, fuel costs, and consumer durables, inflation will rise - as, of course, we are already starting to see.
Consumers - who generate around two-thirds of GDP - will be tightening their belts. So it's entirely reasonable to expect the market to mark down businesses heavily exposed either high import costs or cash-strapped consumers. Or heavily exposed to both, of course.
Sure enough, look closely at the index's constituents, and there's no shortage of businesses matching that description.
Housebuilders Persimmon and BerkeleyGroup, for instance. High street banks LloydsBankingGroup and RoyalBankofScotland. Television companies Sky and ITV. Several retailers. And so on, and so on.
That said, after the initial panic, the market is coming to terms with the real risks faced by some businesses. Immediately following the referendum, financial services company Legal& General plunged by 30%.
To me, that was an over-reaction, and I subsequently added to my existing holding. Today, Legal & General stands at a 25% discount to the Footsie, not 30%.
And in real terms, it's difficult to see how water companies Pennon Group and UnitedUtilities, for instance, will be impacted by Brexit. Likewise, supermarkets Sainsbury and Tesco have shrugged off initial Brexit fears.
Undoubtedly, some businesses genuinely will be impacted by Brexit - but I suspect that the shares of some others have been marked down unnecessarily.
What to do?
As I've remarked before, it's at times like this that the work of the Motley Fool Share Advisor analysts comes into its own. Which shares are the wheat - and which are the chaff?
As there isn't a FTSE Local UK index tracker, index trackers don't have much to offer, although a FTSE 250 index tracker would offer some exposure - and sure enough, relative to the Footsie, the FTSE 250 has suffered, post-referendum.
As ever, the bargains in terms of individual stocks are out there - although careful research will be required. For those looking to start that research, some of the shares I've named above might make a good jumping-off point, especially for income-seekers.
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Malcolm owns shares in Royal Dutch Shell, Glaxosmithkline, HSBC, Lloyds Banking Group, Legal & General, United Utilities, J. Sainsbury, and Tesco. The Motley Fool owns shares in GlaxoSmithKline, and has recommended shares in Royal Dutch Shell, HSBC, Sky, ITV and Berkeley Group