Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 390

How did you go? Australian and global stockmarket winners and losers

Calendar 2020 ended well for shares. Although the coronavirus crisis entered second and third waves in Australia and around the world, there was optimism from:

  • the development of vaccines by three different companies
  • the US elections that resulted in a Democrat clean sweep, and
  • a belief that the worst of the economic contractions are behind us, thanks to huge deficit spending programmes by governments everywhere.

Following are the total returns for the ASX200 index by sector for each of the four quarters, and the full year:

The overall market was back to square in 2020. The best returns for the December quarter were from ‘cyclicals’ in anticipation of easing of restrictions and economic recoveries:

  • the big bank (also boosted by the ending of the dividend cap)
  • oil/gas stocks (with oil prices recovering 20% on improved global demand outlooks)
  • iron ore miners (on a 25% jump in iron ore prices with strong China demand and more export problems in Brazil)
  • other cyclicals including gambling dens (Tabcorp, Star Casino), travel stocks (Flight Centre, Qantas), share registries (Computershare, Link), retail property trusts (Scentre, Mirvac), builders (LendLease, Cimic/Leighton), building materials (Boral, James Hardie, Bluescope), and other cyclicals like Seek (employment), REA (housing)
  • tech stocks also continued their boom run (mainly Afterpay, Xero, Wisetech).

The main winners for the year included:

  • Businesses that benefited from the lockdowns and welfare handouts, including Wesfarmers (Bunnings, Officeworks) and JB Hi-Fi (benefiting from the home office boom), Domino's Pizza (home delivery), supermarkets (Coles and Woolworths), Carsales.com (people buying cars instead of travel), Goodman (warehouses for the online retailing boom in lockdowns), and healthcare stocks (ResMed, Sonic, Ansell, Fisher & Paykel Healthcare).
  • Businesses largely unaffected by the lockdowns, mainly in the tech sector: Afterpay (buy-now-pay-later lender), NextDC (data centers), Xero (accounting software), WiseTech (software).
  • Iron ore miners Fortescue, RIO, BHP, benefiting from China's stimulus boom and Brazil mine closures and lock downs.

Worst for the year included:

  • Oil/gas stocks – Oil Search, Origin Energy, AGL, Woodside, Santos, Worley (oil/gas engineering) – all of the global oil/gas majors around the world posting big losses after the collapse in oil prices in 2020.
  • Insurers such as IAG, QBE, Suncorp – hit by a variety of disasters and crises – including some of their own making.
  • Banks – hit by bad debt provisions, margin squeeze from rate cuts, lending demand, and regulatory penalties.
  • Retail property trusts – most except Goodman (which owns distribution centers for Amazon and other online retailers) and Charter Hall.
  • Construction – LendLease, Cimic (Leighton)
  • Miners other than iron ore – most were lower due to the collapse in global demand, production, trade, prices.
  • Transport stocks hit directly by the lockdowns – Qantas, Sydney Airport, Transurban, Atlas Arteria Brambles, Aurizon
  • Some hit by retaliatory China trade actions – Treasury Wines. A2 Milk, Blackmores.

Global share markets

The leading sharemarkets in 2020 were those that had large weightings of companies in sectors that did well in the lockdowns and welfare hand-outs – mainly online retailing, streaming, gaming, social media, hardware, and essential household supplies.

Conversely, countries with weaker share market outcomes (including Australia) had larger weightings of companies in sectors worst affected by the lockdowns – banks, oil/gas, and retail/commercial property.

This can be illustrated by showing 100 of the largest global listed companies, organised into industry sector groups. Most of these are household names, and most are US companies, as the US makes up more than half of the global share market value.

The US tech giants led the world in 2020, but this is obscured by the fact that they are categorised into three difference industry sectors – ‘consumer discretionary’, ‘technology’ and ‘communications’.

The ‘consumer discretionary’ sector was led by Amazon +76% for the year. We now also have Tesla +743% for the year (Tesla was added to global indexes only in December, so its impact on indexes in 2020 was limited) US hardware chains Home Depot (the model for Bunnings) and Lowe’s also benefited from the home office/renovation boom in the lockdowns.

The ‘tech’ sector also did well in the lockdowns and welfare sprees, led by Apple, Microsoft, Adobe, Oracle, Nvidia for the US. Visa and MasterCard (classified as ‘tech’ stocks for some reason) also did well in the online sales boom. Samsung lifted South Korea, and Taiwan Semiconductor lifted Taiwan.

The ‘communications’ sector has the social media giants Facebook, Alphabet/Google, plus streamers Netflix and Disney for the US, and Tencent for China. However, this sector also contains the old style telcos that dragged the sector down (AT&T, Verizon in the US, as did Telstra in Australia).

The healthcare sector had another good year with most shares up, although the coronavirus crisis partially deprived many firms of their normal revenues. (Australia’s CSL doesn't make the global list but is included in the table for reference).

The other winning market was ‘Materials’. In most countries, this refers to industrial materials like chemicals and gases, but also miners like BHP and RIO, which were lifted by the windfall spike in iron ore prices and volumes.

‘Consumer staples’ were mixed – but the winners were Walmart and Costco for the US (likewise, Coles and Woolworths did well in Australia).

‘Industrials’ were also mixed – airplane makers Boeing (US), and Airbus (France) were down heavily, but UPS (parcel delivery) soared in the online retail boom.

Weighing down the market were ‘energy’ (oil/gas and coal) –this is where the US market was less affected by the negative oil price shock; and ‘financials’ (mainly banks) – hit by bad debt provisions, margin squeeze from the rate cuts, and regulatory fines and penalties. (Australia’s CBA doesn't make the global list but is included for reference).

The remaining sectors (real estate and utilities) are smaller, with negligible impact on global markets. Australia has the largest real estate sector, and this was also a factor in Australia's below-average outcome in 2020.

 

Ashley Owen is Chief Investment Officer at advisory firm Stanford Brown and The Lunar Group. He is also a Director of Third Link Investment Managers, a fund that supports Australian charities. This article is for general information purposes only and does not consider the circumstances of any individual.

 

RELATED ARTICLES

The next big thing: global markets and the emerging consumer

Five industries profoundly changed by COVID-19

Halving super drawdowns helps wealthy retirees most

banner

Most viewed in recent weeks

10 little-known pension traps prove the value of advice

Most people entering retirement do not see a financial adviser, mainly due to cost. It's a major problem because there are small mistakes a retiree can make which are expensive and avoidable if a few tips were known.

Check eligibility for the Commonwealth Seniors Health Card

Eligibility for the Commonwealth Seniors Health Card has no asset test and a relatively high income test. It's worth checking eligibility and the benefits of qualifying to save on the cost of medications.

Hamish Douglass on why the movie hasn’t ended yet

The focus is on Magellan for its investment performance and departure of the CEO, but Douglass says the pandemic, inflation, rising rates and Middle East tensions have not played out. Vindication is always long term.

Start the year right with the 2022 Retiree Checklist

This is our annual checklist of what retirees need to be aware of in 2022. It is a long list of 25 items and not everything will apply to your situation. Run your eye over the benefits and entitlements.

At 98-years-old, Charlie Munger still delivers the one-liners

The Warren Buffett/Charlie Munger partnership is the stuff of legends, but even Charlie admits it is coming to an end ("I'm nearly dead"). He is one of the few people in investing prepared to say what he thinks.

Should I pay off the mortgage or top up my superannuation?

Depending on personal circumstances, it may be time to rethink the bias to paying down housing debt over wealth accumulation in super. Do the sums and ask these four questions to plan for your future.

Latest Updates

Investment strategies

Three ways index investing masks extra risk

There are thousands of different indexes, and they are not all diversified and broadly-based. Watch for concentration risk in sectors and companies, and know the underlying assets in case liquidity is needed.

Investment strategies

Will 2022 be the year for quality companies?

It is easy to feel like an investing genius over the last 10 years, with most asset classes making wonderful gains. But if there's a setback, companies like Reece, ARB, Cochlear, REA Group and CSL will recover best.

Shares

2022 outlook: buy a raincoat but don't put it on yet

In the 11th year of a bull market, near the end of the cycle, some type of correction is likely. Underneath is solid, healthy and underpinned by strong earnings growth, but there's less room for mistakes.

Gold

Time to give up on gold?

In 2021, the gold price failed to sustain its strong rise since 2018, although it recovered after early losses. But where does gold sit in a world of inflation, rising rates and a competitor like Bitcoin?

Investment strategies

Global leaders reveal surprises of 2021, challenges for 2022

In a sentence or two, global experts across many fields are asked to summarise the biggest surprise of 2021, and enduring challenges into 2022. It's a short and sweet view of the changes we are all facing.

Shares

What were the big stockmarket listings in record 2021?

In 2021, sharemarket gains supported record levels of capital raisings and IPOs in Australia. The range of deals listed here shows the maturity of the local market in providing equity capital.

Economy

Let 'er rip: how high can debt-to-GDP ratios soar?

Governments and investors have been complacent about the build up of debt, but at some level, a ceiling exists. Are we near yet? Trouble is brewing, especially in the eurozone and emerging countries.

Sponsors

Alliances

© 2022 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. Any general advice or ‘regulated financial advice’ under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.

Website Development by Master Publisher.