With less than four weeks to go before the end of the year, now is a good time to have a look at the winners and losers in 2009.
And now is also a good time to think about what we can expect in 2010.
The Australian sharemarket is tracking for a yearly gain of 27%. And the best sector has been the second largest sector on the Aussie market-the materials sector-which is tracking for a yearly gain of 42%.
This is not surprising given:
The two biggest companies in this sector are BHP Billiton and Rio Tinto, although they saw vastly different returns. BHP Billiton has gained 37% while Rio Tinto has gained a massive 137%.
In second place is the smallest sector on our sharemarket which is the information technology sector.
This sector is tracking for a gain of 41% and has been helped by the three largest companies in this sector:
Still, all three companies are simply recovering from what was the Global Financial Crisis and none of these shares are yet trading higher than pre-GFC levels.
Not all sectors performed well. Four areas lost ground in 2009 and they were:
The worst by far was the telecom sector with a loss of 10%. Losses have been driven by Telstra, which makes up most of this sector and is down 10.7% year to date so far. Telstra shares have been punished with the NBN process and plans weighing on its share price.
Most of the bluechips on the Australian market managed gains, with 14 out of 20 of our largest companies recording gains.
Only six out of 20 managed losses. The biggest loss in this group was from QBE Insurance. This company is considered a great quality business by most analysts but the high Australian dollar is bad news for its profit.
The high Australian dollar and exposure to offshore earnings has also been bad news for Brambles, CSL and Westfield which saw declines of between 5-10% during the year.
The best gains were from:
2009 is a year that can be characterised by one word and that's 'recovery'. It looks like that recovery process with continue in 2010.
In particular, China will be a key factor for the Australian sharemarket given that it is a large driver of commodity prices.
The other theme is going to be around the Australian dollar which is still near 15 month highs. A high Australian dollar is great news for importers like our retailers but bad news for companies with offshore earnings.
Valuations now seem reasonable and investors will be watching for an improvement in earnings to support cheaper valuations.
All in all, while the recovery of 27% in 2009 has been welcome news for shareholders, for the market to return to pre-GFC levels, we still need to see a rise of 43% from where the market currently sits.
Let the recovery continue.
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