Christmas has come early for the bank’s shareholders with the decision to slightly increase the 2024 dividend – despite a single-digit decline in the net profit and cash earnings.
Beating the market benchmark is never easy, with 72 per cent of Australian actively managed global equity general funds trailing the S&P World Index in the six months to June 30, 2024. Domestic equity funds performed slightly better, albeit against a significantly lower bar set by the S&P/ASX 200 Index.
Which companies have delivered thus far in 2021?
The pandemic and forced lockdowns may never be completely over, but both the unstoppable spread and damage it caused, is largely behind us. Thanks to the help of various vaccines, the case and death rates have fallen significantly. This means that 2021 is shaping up to be a year of “returning to normal”. Thanks to a quick-acting government, the stimulus and support offered to those in need has put the economy on good stead.
But, as with everything that goes up, a return to normal will mean a rotation out of Coronavirus winners and into Coronavirus losers. Out of growth stocks and into value stocks. It’s all positive stuff. Higher spending, better-than-expected retail figures, higher GDP growth and corporate earnings should also equate to a lower unemployment figure.
Looking at the table above, we’ve listed the top five large cap stocks thus far in 2021. At first glance there appears to be few themes at play. 1, Rare earths boom amid Biden’s decarbonisation strategy; 2, Green banking; 3, Media; 4, Waste disposal; and 5, Telecommunications. While none of the stocks operate in the same industry, or are in direct competition with one another, it is interesting to see which sectors did hold on.
Lynas Rare Earths (ASX:LYC), which changed its name from Lynas Corporation in December, topped the list with a 57.3% share price increase. The company has been around for more than a decade, mining rare earth oxides at Mt Weld in Western Australia while building its processing plant in Malaysia, which began operating in 2013. For the half-year ended December 2020, the company posted a net profit of $40.6 million, more than ten times the $3.9 million it earned a year earlier. Due to an increase in demand from all things renewable and Chinese trade war, rare earths prices have gone through the roof, taking Lynas with them. In second spot was Virgin Money UK (ASX:VUK), a coronavirus loser, which went up 48.95% during the quarter. Third was publisher News Corporation (ASX:NWS), while in fourth and fifth places were waste disposal group Bingo Industries (ASX:BIN) with a 35.66% increase, and telecoms company Vocus Group (ASX:VOC) with a 34.16% share price rise.
In the table below, we look at the bottom five stocks of the ASX.
As expected, coronavirus winners such as healthcare and biomedical stocks were sold off as the rotation play to value bites. Infrastructure services player Service Stream (ASX:SSM) topped the list, recording the largest loss, down 32.4% after cutting dividends and reporting a set of poor results as its NBN contracts lose steam. Biotech Polynovo (ASX:PNV) wasn’t far behind, with a loss of 28.1%, while mining services business NRW Holdings (ASX:NWH) lost 28.2%. Both A2 Milk (ASX:A2M) and engineering heavyweight CIMIC (ASX:CIM) lost about 26%, mainly due to company-specific news.
Will this rotation continue? And is it time to Buy? The last few months clearly indicate a large shift from growth to value built upon a change in US leadership that has significantly reduced uncertainty over the global outlook for 2021 and beyond. This is a positive for all global markets.
