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FY 2014-2015 ASX Charts Review

June 30th, 2015 · Greg Atkinson · 13 Comments

Well another financial year has come to an end and for the Australian stock market it has been a fairly poor FY2014-2015, but if you include dividends an average balanced stocks portfolio could have probably returned 3-4% in dividends which in the era of low interest rates is not too bad. However the reality is that the Australian stock market is under-performing markets in Japan, the US and many in Europe – not to mention Chinese stocks which surged skywards during the past year but now look like they are currently falling back to earth.

As regular readers will know I have been fairly bearish about the Australian stock market for a couple of years, I was also bearish about commodities before that bubble burst and have been cautious about the Chinese economy for quite a while.  It now seems to me that many bearish indicators are aligned so there’s not much left to push the ASX 200/ASX All Ords significantly higher in 2015.

But on the other hand we are probably getting near the oversold zone for those brave enough to buy up some sold down blue chip stocks, so for investors with a long term view there might be some good bargains around at the moment.

As for the 2014-2015 financial year, well the best term I can think of to describe the stock market return is “below average”. But that happens quite often, however the real worry is that we are now 8 years past the last market high and still a long way from reaching that peak again. I wonder when we will pass 6500 again?

Unfortunately for most investors, the stock market rally earlier this year fizzled out and then turned into a rout. Consequently this rout basically erased most gains for the financial year for many ASX listed stocks and also so far for the calendar year, as most of the charts I will review will highlight.

First up, the S&P/ASX 200 Index.

S&P/ASX 200 Index (XJO) FY2014-2015 Chart

ASX 200 Index FY2014-2015 Chart

After a less than impressive start to the financial year the ASX 200 rallied from early 2015 only to give up all these gains from April onwards. We may see the market bounce back if the mess in Greece is sorted, but we still have a slowing economy in China to deal with so I am not expecting too much in terms of a rally over the short term.

It was pretty much the same story for the ASX 200 listed financials sector as the chart below of the ASX 200 Financials (ASX:XMF) illustrates.

S&P/ASX 200 Financials Index (XFJ) FY2014-2015 Chart

ASX 200 Financials Index FY2014-2015 Chart

Again it certainly looked promising as the early 2015 rally took hold but as with the ASX 200, the rally faded and the index fell back significantly.

For smaller ASX listed (or small-cap) stocks things were a bit tougher as we can see from the chart of the S&P/ASX Small Ordinaries Index (XSO) which I often consider to be the canary in the coal-mine as far as stock market investing goes.

S&P/ASX All Ordinaries Index (XSO) FY2014-2015 Chart

ASX Small Ordinaries Index FY2014-2015 Chart

My view is that smaller stocks give us an insight into how the economy is faring and to me it doesn’t look good.  If home prices were to roll over this year and head lower then the long overdue recession might be a possibility. But so far it has to said that the Australian economy has had a stellar run which I admit has surprised me.

Speaking of house prices, one ASX Index that has done well over the last 12 months is unsurprisingly related to property.

S&P/ASX 200 A-REIT Index (XPJ) FY2014-2015 Chart

ASX 200 A-REIT Index FY2014-2015 Chart

In the case of the XPJ the rally started earlier and has to date, held up pretty well. The current “property mania” in Sydney is sure to have helped push this Index up however it may find it hard going to push higher for the rest of 2015 from this point onwards.

Now a brief look at some mining stocks which not surprisingly have not fared well.

BHP Billiton, Fortesque Metals & RIO Tinto FY2014-2014 Price Chart

BHP FMG RIO FY2014-2015 Stock Price Chart

Clearly the mining stocks have struggled the the commodities sector in general is still under pressure, however the contrarian in me says that diversified miners like BHP & RIO are attractive long term buys at current prices but please remember, this is not investment advice and their stock prices could still fall a lot further!

 

Finally let’s have a quick look at the Exchange Traded Fund ETFS GOLD just to get an idea of what the gold price in AUD has been doing during the past financial year.

ETFS GOLD (ASX:GOLD) FY2014-2015 Price Chart

ASX ETFS GOLD FY2014-2015 Price Chart

Gold prices have still not fallen back far enough for me to be tempted but having said that ETFS Gold did outperform the ASX 200 Index and plenty of ASX listed stocks over the last 12 months so it’s something I will be watching closely especially if it looks like investors are getting fearful!

So that’s a quick review for the last financial year…the question now is that will happen over the next 12 months? Any thoughts or predictions are most welcome!

This article was written by Greg Atkinson who is the Managing Director of Ohori Capital. Greg is from originally from Sydney but now works and resides in Japan. He can be followed on twitter via GregAtkinson_jp


13 responses so far ↓

  • 1 Stillgotshoeson // Jul 9, 2015 at 10:02 am

    Well it seems we have lost all of this years gains according to an article in the age. Nudged 6000 region down to 5400 region (10% down).

    now it is a wait and see for how much further it has to fall. What sort of government intervention in world markets we may see to impact on us here.

    BHP in the $25’s is becoming tempting.

    Gold is stuck in a trading range and has not seen a flight to safety rise, nor has it been hammered this year either.

  • 2 lachlan // Jul 11, 2015 at 6:28 am

    Shoes I really like the AUD Gold chart; i think the recent consolidation off a 300 dollar run up will give way to another similar spike. The PM run up in USDs will come later too imo. News for miners just gets worse but it has to be buying weather. More layoffs in multinat. qld coal diggers recently.

  • 3 Greg Atkinson // Oct 5, 2015 at 8:15 am

    It does look grim for the miners but I still like BHP and RIO as I reckon they will manage the downturn okay. If they can maintain a decent dividend then I’ll be happy to sit back and watch them for a couple of years and hopefully be in a good position if their stock prices rise again.

  • 4 lachlan // Oct 6, 2015 at 10:42 pm

    The AUD silver price chart is a good watch at present. May go one way or another but is challenging a resistance level which is important and it corresponds with bullishness in AUD gold prices; i tend to think Ag will break upwards but we’ll see because the problem is that miners like BHP and RIO are bearish but then NCM also looks weak in it’s flagging trajectory and could easily break down again. My longer view is inflationary enough to see all these assets as discounted buys anyhow.

  • 5 Greg Atkinson // Oct 12, 2015 at 11:51 pm

    Seems the be two views emerging – one is that we are set for years of deflation, the other is that interest rates will start rising and usher in an era of inflation. But I wonder how many central bankers are actually inclined to raise rates this year or even next?

  • 6 lachlan // Oct 15, 2015 at 5:26 am

    Various sides in the debate have firm views on what CBs will do or be forced to do Greg. I was inclined to be like that until time passed and I thought through this more fully. Whether it’s right or wrong I don’t know however I became very uncertain about what I could know and retreated to simpler grounds. An example of that would be to acknowledge that money supply and prices in a long term sense move upwards with little pause. If I focus in on the dynamics bringing (ie can CBs raise rates) that into fruition I would likely be lost again because important facts are unknowable from the vantage points that the majority generally have. My inflation view does not hold that I can get rich by buying now and selling next year or even the next, rather that in longer time frames (may be of little help to older investors true) it is clear that many assets are now discounted in either real or nominal or even both real and nominal terms. I hold generally that short term trading is for adrenaline junkies. They are fine with me, I played that game too as you’d know. I need adrenaline too however there are smarter ways to get a fix ie ones that don’t “necessarily” result in losing money. Of course I like to jostle around here with the fellas and their various short term bets…all theory, no harm done.

  • 7 lachlan // Oct 17, 2015 at 5:47 am

    Having stated that and so leaving my “actual” macro investment theory intact and to the side, yes it is hard to see bankers can raise rates in the current climate. If they do then a rapid deflationary collapse would occur because there is only enough cash and cash spending going on now to keep things limping. So there would have to be plenty of street money and money velocity before this rate rise could occur. Despite eight years of free marketeers and their economists (not precluding myself years ago) predicting a necessary imminent collapse of the govs and their funding system we have continued to exist just inside the status quo albeit at a more sedate rate of commerce. The new normal eh? How long can that prevail? I have no idea but it seems impossible given all the evidence to believe anything must necessarily collapse at a particular time….and yet it will sometime….looking long term, nature builds and destroys everything.
    One could forward theoretic proposals to explain collapse or sustained deficit spending and yet none of them must necessarily take place or do so at any particular time…sorry Mr Keen although he is a very bright mind no doubt. Binning the dogmatists today.

  • 8 Greg Atkinson // Oct 21, 2015 at 9:15 am

    Lachlan it’s all a bit of mess out there at the moment and for me not a lot has changed from when a few years ago, I questioned how throwing money (QE) at the markets was supposed to fix the problems of mis-pricing risk & asset bubbles which caused all the grief during the GFC.

    Now we need to deal with a lot of debt plus a slowing Chinese economy and the other major economies – EU, US and Japan all struggling to maintain growth.

    I think much of this is already priced into commodity prices while on the flipside almost none of it appears priced into property prices for example.

    So for now, my cunning plan is to sit back and wait for some of the dust to settle. (I.e. do nothing)

  • 9 Biker // Oct 21, 2015 at 5:16 pm

    GA: “…almost none of it appears priced into property prices…”
    Well, I’m not sure that’s entirely correct:

    http://www.news.com.au/finance/real-estate/sydneys-housing-market-contrasts-sharply-with-towns-where-prices-went-from-boom-to-bust/story-fndban6l-1227577351891

    A fella I once knew, a very clever fella, once advised he’d bought _four_ of these… and was getting a 13% p.a. return on his investment.

  • 10 lachlan // Oct 21, 2015 at 7:58 pm

    one thing that never seems to change is mining and it’s boom bust cycle…cant wait for the next boom eh 🙂

  • 11 lachlan // Oct 21, 2015 at 8:07 pm

    yes Greg the commodity rout is mostly over is my thought. It will be interesting to see if housing is affected next then or if it just sits there and looks at us. It would seem that residential housing prices for whatever reason have proven very resilient in Oz. Not so much in the bush though and as BP shows, mining is volatile.

  • 12 Biker // Oct 22, 2015 at 8:58 pm

    DRA: “Subscribe to the free Daily Reckoning email today and discover…

    WHY AUSTRALIAN PROPERTY IS ON THE VERGE OF A DECADE LONG BOOM”

    DRA still contends there’s an ‘Australian Property market’, rather than multiple differentiated markets in Australia… . Now if they were astute enough to propose that Melbourne growth will exceed Sydney’s in the next two years, we might place some faith in their predictions.

    Having very vocally backed Keen’s flawed economic propositions for eight years, they now quote critics who rejected his prophecies.

    The more things change… .

  • 13 Greg Atkinson // Oct 26, 2015 at 10:32 am

    The housing markets are tough to read these days and not just in Australia. Obviously low interest rates are supporting prices but as Biker mentions some areas are not doing so well. All in all property as an asset class has held up fairly well, but the rental yields seem to be under pressure in the ACT for example.

    Meanwhile the ASX 200 is clawing it’s way back towards 5400 and back onto the long term trend.

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