Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 246

Baggy Green summit was bottom of GFC

The only topic to capture more headlines in the past week than Trump’s trade wars has been the Australia - South Africa cricket test series – for all the wrong reasons. Even Trevor Chappell has said he is relieved that after 37 years he is no longer the most hated man in Australian sport. Let's take a different angle by looking at the stock market performance of the two countries.

Dependence on commodities

Australia and South Africa are both commodities-based economies with stock markets dominated by mining explorers and producers. The chart shows total returns (including dividends reinvested) from the broad stock market index in each country, expressed in US dollars to show them in a common currency and starting from a common base from 1993 when South Africa re-joined the world following the end of Apartheid.

Both markets are highly cyclical and reliant on commodities prices and foreign ‘hot money’ capital flows driven by global sentiment. South African shares have done much better in local currency terms (averaging 15% pa in Rand versus 10% for the ASX in Aussie dollars) but returns in US dollar terms have been virtually the same and have followed the same path.

Click to enlarge

South Africa got off to a flying start as foreign money rushed into the newly minted ‘emerging market’ in the early 1990s, but then foreign capital fled in the 1997 Asian currency crisis and especially in the 1998 Russian default crisis. Both had a mild ‘dot com’ boom and tech wreck, but both had a huge 2003-07 China-led commodities boom and subsequent GFC bust. They fell together in the 2015 commodities price collapse and then rose together in the 2016-07 China-led rebound.

The chart reminds us that share prices are driven more by global cycles than local issues.

What about the cricket?

The lower section shows the test cricket match tally between the two countries since South Africa rejoined the sporting world in 1993.  We have played a total of 97 matches in 26 series since 1902. Australia is winning the match tally with 52 match wins, and also the series tally with 16 series wins. Here we focus on the post-Apartheid era.

The blue line shows a running tally of test match wins and losses as +1 for an Australian win, -1 for a South African win, and a bonus +1 or -1 point for a win or loss by an innings, 10 wickets or by more than 300 runs.  After a couple of early wins by South Africa in the Nelson Mandella-inspired post-Apartheid euphoria, Australia gained the ascendency from the late 1990s to the late 2000s under Taylor, Waugh and Ponting. Australia peaked with a 175 run win in the Second Test at Durban in 2007 with two centuries by opener Phil Hughes (the youngest ever player to achieve this, at age 20, on his debut tour).

That match started on 6 March 2009, the same day the stock market reached its lowest point in the GFC.  That day was the turnaround for shares rebounding out of the GFC but it was also the start of a long relative decline in Australian cricket. If the cricket scandal represents the all-time low for Australia, what omens does it offer for stock markets? The road out for Australian cricket surely starts now.

 

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 general information that does not consider the circumstances of any individual.

 


 

Leave a Comment:

banner

Most viewed in recent weeks

The case for the $3 million super tax

The Government's proposed tax has copped a lot of flack though I think it's a reasonable approach to improve the long-term sustainability of superannuation and the retirement income system. Here’s why.

7 examples of how the new super tax will be calculated

You've no doubt heard about Division 296. These case studies show what people at various levels above the $3 million threshold might need to pay the ATO, with examples ranging from under $500 to more than $35,000.

The revolt against Baby Boomer wealth

The $3m super tax could be put down to the Government needing money and the wealthy being easy targets. It’s deeper than that though and this looks at the factors behind the policy and why more taxes on the wealthy are coming.

Meg on SMSFs: Withdrawing assets ahead of the $3m super tax

The super tax has caused an almighty scuffle, but for SMSFs impacted by the proposed tax, a big question remains: what should they do now? Here are ideas for those wanting to withdraw money from their SMSF.

The super tax and the defined benefits scandal

Australia's superannuation inequities date back to poor decisions made by Parliament two decades ago. If super for the wealthy needs resetting, so too does the defined benefits schemes for our public servants.

Are franking credits hurting Australia’s economy?

Business investment and per capita GDP have languished over the past decade and the Labor Government is conducting inquiries to find out why. Franking credits should be part of the debate about our stalling economy.

Latest Updates

Superannuation

Here's what should replace the $3 million super tax

With Div. 296 looming, is there a smarter way to tax superannuation? This proposes a fairer, income-linked alternative that respects compounding, ensures predictability, and avoids taxing unrealised capital gains. 

Superannuation

Less than 1% of wealthy families will struggle to pay super tax: study

An ANU study has found that families with at least one super balance over $3 million have average wealth exceeding $19 million - suggesting most are well placed to absorb taxes on unrealised capital gains.   

Superannuation

Are SMSFs getting too much of a free ride?

SMSFs have managed to match, or even outperform, larger super funds despite adopting more conservative investment strategies. This looks at how they've done it - and the potential policy implications.  

Property

A developer's take on Australia's housing issues

Stockland’s development chief discusses supply constraints, government initiatives and the impact of Japanese-owned homebuilders on the industry. He also talks of green shoots in a troubled property market.

Economy

Lessons from 100 years of growing US debt

As the US debt ceiling looms, the usual warnings about a potential crash in bond and equity markets have started to appear. Investors can take confidence from history but should keep an eye on two main indicators.

Investment strategies

Investors might be paying too much for familiarity

US mega-cap tech stocks have dominated recent returns - but is familiarity distorting judgement? Like the Monty Hall problem, investing success often comes from switching when it feels hardest to do so.

Latest from Morningstar

A winning investment strategy sitting right under your nose

How does a strategy built around systematically buying-and-holding a basket of the market's biggest losers perform? It turns out pretty well, so why don't more investors do it?

Sponsors

Alliances

© 2025 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. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. 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.