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London's stock market is the world's worst this year




The benchmark FTSE 100 has dropped 11% so far this year, making it the world's worst performing major index.

International fund managers are more pessimistic than ever before about UK stocks, according to a survey by Bank of America Merrill Lynch. The investment managers, who control a combined $514 billion, said the UK was their main "big short."

Stocks have been hit this year by tensions over global trade, but here are three other factors driving the FTSE 100's dismal performance:

1. The pound

The FTSE 100 has a pattern: When the pound dips, stocks go up. When the currency strengthens, shares drop.

The pound has gained 4.4% against the US dollar in 2018, pushing it to $1.41. That's a major swing from the months following the Brexit vote in June 2016, when the currency traded as low as $1.20.

Lukas Daalder, chief investment officer at asset manager Robeco, said the pound's strength was the "most important, direct reason" for the FTSE 100's dismal performance.

The index is comprised of 100 large companies like banks, miners and oil companies that do lots of business outside the United Kingdom. The profits they earn abroad are translated back into pounds...