ASX down 13% for year, and counting

THE sharemarket is on track to deliver its second-worst annual performance in almost two decades after the crisis in Europe, slowdown in the US and rising dollar hammered many of the country's largest stocks.

By InvestSMART · 1 Dec 2011

By InvestSMART ·
1 Dec 2011

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The benchmark S&P/ASX200 has lost 13.2 per cent in value, or $159 billion, since the beginning of the year, only performing worse in the midst of the global financial crisis in 2008.

Leading the market down were Qantas (down 40.3 per cent since January 1), financial services outfit Macquarie Group (down 37.5 per cent), iron ore producer Fortescue Metals (down 30.6 per cent) and QBE Insurance (down 25.8 per cent).

BHP Billiton has fallen 22.8 per cent this year and the major four banks have all lost ground. ANZ was the worst performer (down 14. 8 per cent). NAB was the best of the banks (down 1.2 per cent).

The market closed yesterday at 4119.8, up 0.4 per cent.

The poor performance in equities fed through to many superannuation funds and balanced funds are set to provide members with little return this year.

"All of the assumptions that people were making at the start of the year, and which fed through to their portfolios, have all proved to be wrong," Tim Rocks, an equity strategist at Merrill Lynch, said.

He said investors 11 months ago thought domestic conditions would improve, the US would recover from a

Inside

Balanced funds out of whack PAGE 5

Market report PAGE 10

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Frequently Asked Questions about this Article…

Why is the ASX down about 13% year-to-date and what caused the drop?

The S&P/ASX200 is down roughly 13.2% year-to-date after a combination of shocks: the crisis in Europe, a slowdown in the US and a rising Australian dollar. Those factors hit many of Australia's largest stocks and drove the index to its second‑worst annual performance in almost two decades.

How much value has the S&P/ASX200 lost this year in dollars and points?

The benchmark S&P/ASX200 has lost about 13.2% in value — roughly $159 billion since the start of the year. The market closed most recently at 4,119.8 points (up 0.4% on that session), though the index remains well down year-to-date.

Which ASX-listed companies led the market decline this year?

The biggest falls came from several large names: Qantas (down 40.3% since January 1), Macquarie Group (down 37.5%), Fortescue Metals (down 30.6%), QBE Insurance (down 25.8%) and BHP Billiton (down 22.8%).

How have the major Australian banks performed during this downturn?

The big four banks all lost ground. ANZ was the weakest performer among them, down about 14.8% year-to-date, while NAB was the least affected, down about 1.2%.

What impact has the ASX decline had on superannuation and balanced funds?

The poor performance in equities has fed through to many superannuation funds. According to the article, balanced funds are set to provide members with little return this year as equity losses drag on overall portfolio results.

How does this year's ASX performance compare with the 2008 global financial crisis?

This year is the second‑worst annual showing for the ASX in almost two decades; the only worse performance was during the global financial crisis in 2008.

Did the market show any short-term improvement despite the year-to-date losses?

Yes — the article notes the market closed at 4,119.8 points, up 0.4% on the referenced day. That session gain is a small short‑term uptick, but it didn't offset the significant year-to-date decline.

What key message did analysts offer about investors’ expectations this year?

Merrill Lynch equity strategist Tim Rocks said the assumptions investors made at the start of the year — such as expectations of improving domestic conditions and US recovery — proved to be wrong, contributing to portfolios underperforming and the difficult year for equities.