ASX & IPO Review for Q1 2017
Australia’s benchmark index for blue-chips, the S&P/ASX 200 gained 3.5% during the first three months of the year.
The first three months of 2017 were characterised by low volatility and overall bullish sentiment. After a 4.2% gain during the fourth quarter of 2016, favourable market conditions on the ASX were sustained during the first quarter of 2017. Bullish sentiment in the US and Europe and a somewhat resilient local earnings season encouraged investors to buy into high-risk assets.
ASX Gains 3.5% during Q1
Australia’s benchmark index for blue-chips, the S&P/ASX 200 gained 3.5% during the first three months of the year. Blue-chip stocks outperformed small caps as investors bought into the banks and income stocks. The broader All Ordinaries Index added 3.2% and Small Ordinaries, which represents the small cap members of the S&P/ASX 300 Index, but excludes those in S&P/ASX 100 Index, rose 0.4%.
Sector Review: Health Care Outperforms, Telcos Disappoint
The Healthcare sector was the strongest performer on the ASX rising 13.9%, followed by Utilities and Consumer Staples up 9.6% and 8.8% respectively. Gold companies outperformed as well adding 8% as a group. The weakest sector was Telecommunications which declined 7.5% during the three months.
Major movers on the ASX 200 included companies in Consumers Staples, Industrials, Materials and Health Care. Bega Cheese Ltd (BGA) was the strongest stock during the quarter rising 49.3%, followed by Seven Group Holdings (SVW) and the A2Milk Company (A2M) up 36.6% and 34.3% respectively. The largest company in the list of top performers is biopharmaceutical company CSL Limited (CSL), which rose 24.8%.
The worst performer on the ASX 200 was Isentia Group (ISD) whcih lost 47.8%. Other companies include Bellamy's (BAL) or Brambles, down 37.1% and 24.6%.
First Quarter IPO Review
During the first quarter, 26 IPOs listed on the ASX raising $232.3 million. IPOs achieved a mean return of 18.3%
IPOs Outperform ASX 200 by 14.8%
In Q4 2016, IPOs outperformed the ASX 200 by 5.1%. In Q1 2017, the momentum gathered pace as the IPOs outperformed ASX 200 by 14.8%.
The Materials sector dominated the number of IPO listings in Q1 2017 with 10 listings. The sector registered an average performance of 15.7% at the end of Q1 2017. At the end of Q1 2017, the notable performers were Ardea Resources (Materials) with a 160.0% return, eSense-Lab (Healthcare) with a 140.0% return, Roto-Gro International (Industrials) with a 105.0% return, Wattle Health Australia (Consumer Staples) with a 72.5% return, and MetalsTech (Materials) with a 55.0% return.
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The largest five listings in Q1 2017 were Fat Prophets Global Contrarian Fund, Visioneering Technologies, Velocity Property Group, Bigtincan Holdings, and Eildon Capital. These five listings together raised $119.5m (about 51.4% of total funds raised during the quarter).
Wise-owl members were able to capitalise on the best performing IPO, Ardea Resources, the spin-off of Heron Resources (HRR), which why recommended to buy in may 2016 as part of our Growth Portfolio.
Click here to read the full IPO report