The sharemarket is no sure bet at the best of times but few investors could have predicted the twists of 2020 or the winners and losers along the way.
“A lot of people have talked about it being the best, the worst and most extreme,” says Tribeca portfolio manager Jun Bei Liu. “I saw the GFC and I haven’t seen volatility like this.”
From all-time highs to record lows and a nine-month march almost back to where it began, it was a year of extremes for ASX traders who battled an unprecedented set of conditions.
So what went right for investors in 2020?
Which firms benefitted, and who was left bruised? Let’s look at some of the leaders and laggards of 2020 and the trends that defined a year like no other.
Good year: Tech and Buy Now, Pay Later
A rollercoaster year for Australian tech stocks was ultimately a story of extraordinary success and growth. The sector took a beating just like any other during the March selloff but was among the fastest to rebound as lockdowns and travel bans kept Australians home and forced them online for work, shopping, and even basic conversation.
The local tech contingent has a market cap of about $90 billion – ranking as the ninth-largest ASX 200 sectors – meaning it may not have boosted the wider bourse in the same way that US giants Apple, Microsoft, Amazon, Google and Facebook did for the NASDAQ or Wall Street.
But, even as prices wilt amid a late-year rotation back into value stocks, the sector’s near 40 per cent collective gain made it a year to remember.
The obvious star of the index was Nick Molnar and Anthony Eisen’s buy now, pay later darling Afterpay. At its peak the $34 billion company more than tripled in value from where it started the year, weathering regulatory scrutiny as it grew its share price above $120 on an expanding global footprint and a stream of analyst upgrades.
Not bad considering its shares were worth just $8.01 at the floor of the market in March.
Rival payment platforms were also buoyant. Zip Co – technically a financial firm – had also tripled in value at its August peak of $10.64 and in September was included in the ASX 200. Outside the benchmark index, church-focused Pushpay more than doubled its share price, Sezzle quintupled to a high of $11.83, and Splitit’s peak represented an increase of about 200 per cent.
There was also joy for a host of the bigger tech firms. Machine learning and AI company Appen increased its share price by as much as 94 per cent, while accounting software firm Xero grew by more than 90 per cent to boost its market cap above $21 billion. Data centre operator NEXTDC trumped both, more than doubling its value as it hit a 2020 peak of $14.10 in early November.
Mixed year: Travel and airports
Australians faced a battle to head down to the corner shop, let alone travel to lands afar, so it’s no surprise that some of the heftiest declines hit businesses that rely on people coming in and out of the country. State border closures also brought the world’s second-busiest domestic route – Melbourne to Sydney – to a standstill.
Government-imposed border restrictions and international travel bans may have helped stop the spread of the virus, but the resulting economic scars have been deep and wide for our listed airlines, airports, and travel agents.
For many, the cashflow dried up on day one and was followed by tens of thousands of layoffs, plummeting share prices, and a swathe of capital raisings just to stay afloat.
Tourism-focused firms such as Flight Centre and Webjet were particularly hard hit.
A dose of vaccine optimism has since given the pair a year-ending tailwind but, as of early December, both were still well down for 2020 and far underperforming the likes of business-focused firm Corporate Travel Management.
The pandemic melted traffic at Sydney Airport and Auckland International Airport and both companies remain well in the red at the end of the year despite the prospect of domestic flights ramping up. Both completed capital raisings of $2 billion and $1 billion respectively.
National carrier Qantas also endured its share of pain, taking a knife to its workforce and fleet to stem the revenue bleed and tapping shareholders for $1.9 billion.
Good year: Electronic and homeware E-tailers
Online electronics and homewares were among the standouts of the pandemic’s 2020 retail revolution as lockdowns changed the way we shop, and what we shopped for.
With less cash needed for travel, transport, or hospitality, Australians instead spent big to set up their home offices and deck their homes with creature comforts befitting a quarantine bunker.
While a swathe of retailers was obviously left scarred by the shutdown of the economy, for a select few, the stimulus-fuelled work-from-home revolution lifted sales to record highs.
Share prices for familiar names such as JB Hi-Fi, Adairs, Nick Scali and Breville enjoyed a surge in revenue – even with storefronts closed across the country – while pure-play online firms such as Kogan, Redbubble, and Temple and Webster lit up the All Ords.
Retail gains also rolled into the garage, with ARB Corp hitting record highs of $33.83 and paying out a hefty dividend on pent-up demand for four-wheel drive parts.
Of all the lifestyle changes to come from the pandemic, the shift to online retail may well prove a lasting one, even if analysts tip normalising consumer behaviour to drag on sales in 2021.
Good year: Iron ore and gold
It has been said that Australia once rode on the sheep’s back to economic prosperity.
These days it’s clear we’re sitting on the shoulders of mining giants.
Iron ore remains the country’s biggest money-maker and the bulk metal was again a superstar for the local economy in 2020. Strong demand from an infrastructure-focused China and supply issues at export rival Brazil pushed prices to seven-year highs of above $US170 a tonne, delivering huge gains for a swathe of ASX 200 materials companies who, according to investors, have replaced the banks as dividend heavyweights.
But it wasn’t global miners Rio Tinto and BHP who set the pace in 2020.
Mineral Resources and Fortescue Metals boasted a far superior share price performance, each surging to record highs.
Fortescue’s huge year saw its market cap balloon above $65 billion as its shares moved above $23 in December’s iron ore surge. The majority stake held by majority shareholder Andrew “Twiggy” Forrest was, at one point, worth more than $25 billion.
Gold prospectors also shone brightly – at least for the first 10 months of the year – with the precious metal logging fresh all-time highs above $US2050 an ounce at the start of August. Gold did lose its lustre in the final weeks of 2020 as it was caught between rising coronavirus numbers in the US and Europe and the delivery of a vaccine, but there were plenty of highs hit before then.
Saracen Minerals at one point had doubled in value in what could be its final year as a standalone entity before it completes a mooted $16 billion merger with Northern Star.
Ramelius Resources, Evolution, and Silver Lake Resources were also strong gold performers, increasing their share prices more than 100 per cent at their peak.
South Australian-focussed OZ Minerals is another miner that deserves a mention. The copper miner’s share price rose more than 50 per cent at its October height as South American outages boosted prices during the year. Heightened prospects remain for the metal that is used in most electronics, as well as electric vehicles.
Mixed year: Energy players
An oil price war between Saudi Arabia and Russia got the year off to a rocky start and things only got worse for energy firms as lockdowns and travel restrictions smashed global fuel demand.
Oil prices tanked as quarantine measures kept planes grounded, cars in garages, and industrial outputs weak.
The oil supply glut pushed storage levels to the brink. In April the price of US crude turned negative for the first time in history when futures contract owners couldn’t sell their paper and panicked they might actually have to take delivery of the black sticky stuff.
Vaccine hopes and the associated cyclical resurgence has lifted local oil and gas companies in the same way that it has lifted travel stocks, though the ASX 200 energy sector remains by far the hardest hit across the whole of 2020.
Woodside Petroleum, whose chief executive Peter Coleman described conditions in 2020 as the toughest in his 40-year career, more than halved in value at its March nadir to a 16-year share price low of $14.93. Its $5 billion half-year loss in August came after it announced it would slash up to $6 billion from the value of its assets, though the company’s underlying profit beat expectations.
Papua New Guinean-focussed Oil Search and fellow gas giant Santos were among the others to count the cost of tanking prices. Beach Energy, Origin Energy, and Cooper Energy were similarly ravaged.
Coal miners were also in the doldrums as prices took a dive and investor awareness and action on climate continued to pressure the industry. Whitehaven shares sagged to a four-year low of 83 cents in September – a drop of nearly 70 per cent. The company has since recovered a bit of ground but the $5.40 peak of July 2018 still seems a long time ago.
Good year: Ventilators, rubber gloves
A grim reality of the pandemic – and a boon for healthcare investors – has been the surging need for ventilators and hospital equipment.
New Zealand-based medical device maker Fisher and Paykel was one of the key beneficiaries of this shift, with the firm’s profit and share price soaring through the first and second waves of COVID-19.
Shares in the $20 billion, dual-listed medtech rose more than 65 per cent to hit a record high of $34.92 in July and moved back within touching distance of that peak in November before it too faded amid vaccine optimism.
US-based ResMed followed a similar path, taking a new all-time peak three times in 2020 as it responded to record demand for hospital hardware at the same time that its sleep apnea sales took a hit. Its ASX-listed shares were as much as 42 per cent higher at its November peak of $30.08.
Rubber glove-maker Ansell was another early star in a pandemic-stricken index as hygiene needs moved front-of-mind. The firm went on a run of record highs from May to August before peaking at $43.17 in November.
A wildcard in the ASX 200 health sector was stem cell researcher and day-trader favourite Mesoblast. The firm at one point more than doubled in value to a six-year high of $5.70 as it made steps towards gaining approval for its flagship remestemcel-L. However, a series of unfavourable updates sent the firm’s share price plummeting as much as 40 per cent in a single December session.
Mixed year: Landlords
It’s a fairly simple equation: Pandemic keeps people inside, stores stay empty, revenue dives, stores struggle to pay rent, stand-off with landlord intensifies.
Once-bustling CBDs were reduced to wastelands during quarantine and retail landlords – already dealing with a shift to online commerce – were among the hardest hit. Rent collections plunged amid at-times hostile stand-offs with retail tenants. Some simply stopped paying rent. Others demanded new revenue-linked occupancy deals, or threatened to walk away altogether.
Mall owners Vicinity Centres and Scentre Group not only booked billions in write-downs against their respective property portfolios but also had to fight hard to shake the ‘bully boy landlord’ tag over their efforts to claw back rent.
The reopening rally has since helped retail REITs pick up from the March lows but, much like their European-focussed cousin Unibail-Rodamco-Westfield SE, the scars of 2020 are clear to see in their depressed share price performance.
On the other hand, industrial property titan Goodman Group rode the accelerating e-commerce economy to more than 12-year highs as retailers adapted their supply chains and demand for warehousing space surged.
At its peak in November, the firm had risen 50 per cent for the year to $20.07, boasting a market cap of more than $34 billion.
“The logistics and warehousing sectors globally are playing an important role, providing essential
infrastructure and enabling distribution of products to the community,” chief executive Greg Goodman told investors at the firm’s AGM.
“COVID-19 and the associated lockdowns have created new online consumers, which will likely further increase e-commerce sales, that are forecast to grow at over 25 per cent in 2020. This in turn will also drive the need for more data storage.”
Source: Thanks smh.com