The ASX200 had a mediocre start to 2016 so far declining 7.3%. However, it makes little to no sense to call it 'the worst start to a new year' or something along these lines, as we would be comparing apples and oranges. Each year has different fundamentals, different macroeconomics and most importantly a different history. It is easier for a market to rise after a substantial fall and vice versa.
It’s not new for a stock market to decline and while it may be painful at the time, it is an essential part of the system. More important than the market as a whole is the performance of individual stocks (unless you are holding an index ETF) and making appropriate choices accordingly. So far this year the focus of the media has been China, oil or the refugee crisis in Europe which has significantly influenced sentiment.
Please note: All prices are as of 16/02/2016. No guarantee is made for the accuracy of this data.
ASX200 Sector Performance Year-to-Date
The table below contains 10 major industry groups of the ASX200 and their performance as a group year-to-date.
||YTD in %
The Utilities sector has been the best performing sector so far this year, and the only sector in the black thus far. Financials and Information Technology have been the worst performing sectors to date down approximately 12%. Energy and Materials were the worst performing sectors in 2015, however it is worth noting that both sectors have outperformed the ASX200 during the first few weeks of the year.
Best ASX200 Performers Year-to-Date
The table below contains the ten best performing stocks on the ASX200 year-to-date. This table does not include any dividend payments and solely focuses on capital growth.
||YTD in %
We note that a substantial number of companies belongs to the mineral resource sector, particularly gold mining companies. This coincides with the recent appreciation of spot gold prices as investors appear to be seeking ‘safety’ in gold. While gold has been in a bear market and significantly underperformed equities since 2011, investors seem to believe that an investment in gold provides some sort of hedge against market turmoil. Higher prices have boosted interest for local gold miners, which have already experienced favourable trading conditions in 2015. Expressed in a simple way: higher gold prices mean higher profit margins for producers.
We also note Medibank (MPL), JB HiFi (JBH) and CIMIC Group (CIM) in the top ten list, which have recently announced strong financial reports or trading updates.
Worst ASX200 Performers Year-to-Date
The table below contains the ten worst performing stocks on the ASX200 year-to-date. This table does not account for dividend payments.
||YTD in %
We note that the worst performing companies belong to a number of industries as no specific trend is visible.
Programmed Maintenance Services (PRG) has been the worst performing stock on the ASX200 year-to-date, down ~55%. The company released a profit downgrade on 4th February 2016 and announced impairment charges in the wake of lower oil prices. Management noticed a sharp drop for its marine services which resulted in the write-down of the value of its marine goodwill. Investors also seem to question the benefits of the acquisition of Skilled Group, announced late last year.
Nine Entertainment (NEC) and Ten Holdings (TEN) are part of the media industry, which is fighting for market share and experiences challenging conditions. Viewers continue to shift to online streaming providers such as Netflix, making it difficult for free to air networks to compete and retain audiences. Companies that are slow to adopt to trends will inevitably lose market share.
BT Investment Management (BTT) and Henderson Group (HGG) are both asset management companies with significant exposure to high-risk assets. Whilst both companies experienced a strong 2015, investors now reduce exposure amid the recent volatility and depreciation of global indices.
Author: Simon Herrmann
Feb 17, 2016
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.