by Chris Becker
UBS has a note out today highlighting the winners and losers of Aussie stocks for this calendar year. The absolute return is around 1-2% (or a good day’s upmove), if you included dividends and almost no movement in the index itself:
As UBS rightly point out that is a great deal of underperformance vs other stock markets around the world (US S&P500 up 11%, Nikkei up 7%, European stocks up 2%), but more so in USD terms.
By theme or sector its no surprise that resources dragged but also consumer staples, with banks only performing on an absolute basis – i.e their dividends:
Australia’s underperformance was driven most significantly by its large overweight in resources (notably mining) and an uncharacteristically poor performance from consumer staples as the market moved to price in rising competitive threats in the long standing supermarket oligopoly.
But there was upside too, with high yielding defensive stocks pulling the weight, except banks which only performed in dividends basis.
Energy/materials sectors were -20% draggers, with discretionary retail and consumer staple sectors the runners up for wooden spoon as the chart below shows. Note the final column to the right with significant revision in earnings per share (EPS) across most sectors, although quite rightly defensive sectors are about right on target.
And a tip to MB’s theme of the year:
Outside of the yield trade, defensive foreign currency earners (as best represented by the health care sector) also performed very well.
Indeed! Check out the top 20 performers:
Contrasted against the bottom 20, dominated by iron ore and LNG:
With consensus EPS growth for the market of less than 4% for FY15, there’s not much to pick among that bunch except on contrarian oversold plays. Notwithstanding significant change in the macro outlook, the MB theme of AUD-exposed industrials continues in the medium term.
Before we head off for the Xmas break, I’ll be going over the trades of 2014, looking at global stock markets, currencies and commodities before turning an eye to what are the potential trades and strategies for 2015 and beyond.