The Australian Market Has Stumbled To The End Of 2014, A Weakling Cousin To Global Markets

Joel Griffiths of the Jets after losing the round 14 A-League match between the Newcastle Jets and Melbourne City FC. Ashley Feder/Getty Images

The Australian market, which spent much of the year smashed about by falling commodity prices, crawled to a flat close for 2014.

The final result was a rise of just 1% for the 12 months as measured against the S&P ASX 200 close on December 31, 2013

This is a performance well below that of the world’s major stock exchanges. Australia is now ranked 44th against its peers across the world.

The 2014 result compares to 2013 when the S&P ASX 200 grew by 15.1%. The 20-year average for the ASX is 6.8%.

The sectors hardest hit over the year were energy and mining stocks, which were down around 15%.

Pure play iron ore miner Fortescue lost about half its market value, while Atlas and BC Iron slumped about 80%, according to CommSec.

Property trusts did well, up around 23%, and healthcare up 22%, followed by telcos, up 15%.

Finding a good return took some effort in the wild swings of 2014.

“Compared to other global peers like the US (13%), Shanghai (50%) and Japan (7%) we have significantly underperformed,” says Stan Shamu, Market Strategist at IG.

The local market hit a low point in February and peaked in August. The market is not far off the median of these two points.

Shamu says the big factor was the slump in prices for iron ore and oil. Iron ore has dropped around 47% while brent crude has declined 45%.

“This has put the materials and energy plays under significant pressure; essentially nullifying the gains in other sectors that have performed well like the banks. The healthcare space has also been a significant outperformer with USD earners dominating the gains. ResMed for example is up a whopping 31% and is among the best performers. On the losing end, energy stock Santos has shed 44% almost matching the decline in oil for the year.”

One of the few stocks to do well from a fall in oil prices, which means cheaper aviation fuel, is Qantas whose shares have more than doubled over the 12 months. It stocks closed the year at $2.40 compared to a low of $1.025.

Shamu says the tough market meant good activity for IPOs.

Medibank Private was the biggest event of the year as investors struggled to see opportunities elsewhere. Retail investors in the $5 billion float bought their shares at $2 each. Today the shares closed at $2.40.

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