FY11 was a tale of two halves.
The first half was all about recovering from the Global Financial Crisis with a rise in the sharemarket of 12%.
The second half was dominated by concerns over the European Sovereign debt, natural disasters in Australia, New Zealand and Japan and on-going worries about a lacklustre US recovery. The sharemarket lost 6%.
Obviously it was a big year on many fronts. But all in all, there was an overall gain, albeit a small one, with a rise of 5% for the full financial year.
It shouldn’t be a surprise that the best performing sector of the year was the materials sector with a gain of 14%. Underpinning the strong performance was another big rise in commodity prices:
The winner in the materials sector was a little known stock called Bathurst Resources (BTU). It was also the best performer in the ASX 200, yet it only made the ASX 200 for the first time after Standard & Poor's June rebalancing. So even though it was a late entrant, Bathurst Resources managed to top the tables with a hefty rise of 560%.
So what does Bathurst Resources do? It’s a producer of high quality coking and thermal coal.
Coming in second for the materials sector was Lynas (LYC) which managed a rise of 260% by taking advantage of China once again cutting export quotas on rare earths.
Despite a number of profit downgrades from the industrial sector it was still the second best performing sector on the sharemarket, rising almost 10%.
Best stock for industrials sector
NRW Holdings (NWH) rose 175%. It also managed to make it into the ASX 200 through the June rebalancing.
Capital expenditure of mining companies
Capital expenditure by mining companies was a big theme and should continue to be for the next 12 months.
One company that benefits when mining companies expand is Emeco (EHL), an earthmoving rental equipment supplier for the mining industry. Its shares managed to expand 100% during 2010.
Consumer staples
Consumer staples benefited from the takeover bid for Fosters (FGL), which was up 29%.
However, it was Graincorp (GNC) which took the number one place in this sector. Graincorp benefitted from a break in the drought, where good weather improved prices. Its stock went up 59%.
The big losers were in sectors impacted by the high Aussie dollar, including information technology which lost 11%.
The Aussie dollar hit its highest level since it was floated in the early 1980s. Stocks with foreign earnings were hit hard. For example, Computershare (CPU) lost 16%.
Other losers included the telecommunications sector which lost 7.6%. Telstra (TLS) lost 9% despite a dividend yield close to 10% and signing an NBN agreement worth a pre-tax net present value amount of $11 billion.
But the wooden spoon for the worst performing stock in the top 200 was Energy Resources of Australia (ERA), the world's fourth largest uranium producer via its Ranger mine in the Northern Territory. ERA lost 69% on the sharemarket for the year. The Japanese nuclear disaster was bad news for uranium prices, demand and uranium stocks. France and Switzerland vowed to cut out nuclear power plants. ERA shares lost more than double the other uranium shares listed in Australia. That’s because it was hit with the double-whammy of flooding in its NT uranium mine. The rain stopped production and meant ERA was forecasting a loss for the full year.
All in all, it was not a great year for making easy money during these tough times. All the more reason to think about risk management and the role it plays in your trading and investment strategy.
Happy trading Julia Lee Equities Analyst
Have you joined Australia's best value online broker? Register now>