Today the Australian stock market is slipping back towards 4500 as once again investors are becoming concerned that the feeble global economic recovery is faltering. But rather than focus on the short term movement of the stock market let’s once again look at the 52 week share prices of some commonly held Australian stocks.
First the good news: the stock market is nowhere near the bear market lows of March 2009 but the somewhat worrying news is that the ASX All Ordinaries and S&P/ASX 200 have both been struggling since late last year.
This is a concern because the mining sector and commodities exports have been surprisingly strong, unemployment levels in Australia have remained relatively low when compared to other G20 economies and the housing market has been very robust.
So on one hand it seems the Australian economy has been somewhat sheltered from the worst of the global financial crisis and yet, Australian stock prices have been struggling. Maybe a look at the stock prices below will help us understand what might be happening?
52 Week Stock Prices Highs/Lows
(Last trade/closing prices as of 10th August 2010)
|Company/Stock||Last Close||52 Week High||52 Week Low|
|Commonwealth Bank (CBA)||$52.75||$60.00||$43.44|
|National Australia Bank (NAB)||$24.50||$32.37||$22.23|
|Westpac Banking Corp (WBC)||$23.28||$28.43||$20.56|
|ANZ Banking Group (ANZ)||$22.63||$26.23||$18.73|
|Macquarie Group (MQG)||$39.58||$58.80||$35.01|
|Babcock and Brown (BNB)||De-listed||N/A||N/A|
|Platinum Asset Mgmt (PTM)||$5.21||$6.34||$4.42|
|Wilson Investment Fund (WIL)||$0.70||$0.81||$0.63|
|Perpetual Limited (PPT)||$31.51||$41.39||$27.11|
|Consumer & Domestic Economy|
|Goodman Fielder (GFF)||$1.28||$1.78||$1.27|
|Domino’s Pizza (DMP)||$5.42||$5.80||$3.67|
|Virgin Blue Holdings (VBA)||$0.30||$0.80||$0.28|
|Telstra Corporation (TLS)||$3.27||$3.71||$2.88|
|Woolworths Limited (WOW)||$26.70||$30.57||$25.19|
|Fairfax Media (FXJ)||$1.49||$1.89||$1.26|
|BHP Billiton (BHP)||$40.73||$44.93||$35.58|
|Rio Tinto (RIO)||$72.60||$81.25||$55.20|
A closing price in green means the stock is trading higher than last time a check of 52 week stock prices was undertaken. (February 2010) A closing price in red means the stock price has fallen over the same period. A figure in black means the share price is approximately the same as the last review.
Since October 2009 most stocks have slid backwards apart from the miners BHP Biliton (BHP) and Rio Tinto (RIO), the consumer staple Dominos (DMP) and Australand (ALZ) a listed property trust.
Since the last review in February this year 3 out of the four banks are up as is Woolworths.
The big mining companies have done well on the back of stimulus spending across the G20 especially in China, Dominos has probably benefited from people eating at home more rather that dining out and Australand has bounced back strongly from being oversold.
But apart from these stocks all others have slipped back since October 2009 and I would suggest this reflects how the underlying Australian economy is really fairing. In other words if you strip out Government stimulus spending then it is fairly tough out there in the domestic market for most Australian companies.
The major banks do appear to have been doing well in terms of bringing in money but housing loans have been dropping off considerably over the last few months and business lending is down so this is probably keeping their stock prices subdued.
Perhaps the 52 week stock prices are pointing out the obvious in that exports are doing well but the domestic economy is starting to struggle? But if the mining sector can keep creating jobs then perhaps the short term weakness in the domestic economy will be nothing more than that, a short term blip?
However if we see the demand for commodities weaken a little as many G20 nations tighten their belts then unemployment in Australia could start to creep up and the domestic economy may weaken further. This would put pressure on stock prices and the ASX All Ords/ASX 200 may struggle to post any major gains for 2010 at all.
What is likely to happen over the next few months…who can say for sure? But certainly the U.S economy is starting to look fragile again and one wonders how long China can be insulated from the economic woes afflicting many of it’s major trading partners.
The main shock of the global financial crisis has passed, but it’s impact on the global economy is still being felt.