Healthcare trumps in jittery times
The healthcare sector has been the standout performer on the Australian stock exchange in the 2013 financial year, as materials stocks took a beating amid a gloomy outlook for mining and mining services.
Despite the recent falls, the benchmark S&P/ASX 200 Index finished the financial year 17.3 per cent higher at 4802.6 points, with high-yielding stocks driving the rally.
This was the biggest gain since the 2007 financial year, when the S&P/ASX 200 Index rose 25.6 per cent. However it dropped 16.9 per cent the following year as the financial crisis hit.
The gains cap off a whipsaw financial year in which growing optimism over a stabilising Europe and a US economic recovery were undercut by jitters over the outlook for growth in China - the world's second-biggest economy.
Even as resource stocks lost their shine, minerals explorer Sirius Resources led the charge on the S&P/ASX 200 Index, jumping a staggering 3547 per cent.
The broader All Ordinaries Index rose 16.88 per cent for the year to 4775.4 points.
The healthcare sector, which is sensitive to the movements of the Australian dollar, received a boost during the currency's current slide and finished the year 42.64 per cent higher.
"People have valued the earnings certainty they've given," Deutsche Bank's head of research sales, Glenn Morgan, said of healthcare stocks.
The global search for yield amid falling interest rates boosted the stocks of the four big banks as well as defensives such as Telstra and Wesfarmers.
In contrast, the materials sector struggled as mining and mining services were hit by a slowdown in the Chinese economy and falling commodity prices, and slipped by 8.14 per cent.
The top performer on the ASX's top 50 companies was the Macquarie Group, which experienced growth of 61.46 per cent. News Corp was second with a gain of 61.4 per cent after getting a boost over its looming film unit demerger, while Insurance Australia soared by 57.47 per cent.
The worst performing stock among majors was goldminer Newcrest Mining, which fell 56.57 per cent, with the company facing scrutiny over a 15 per cent share price slump before a major restructuring announcement this month.
Magellan Financial Group came in second to Sirius Resources, growing 384.32 per cent for the year.
RBS Morgans director of equities Tony Dennis said Sirius' moves during the year, which saw it soar to $4.99 in March - a growth of 8665 per cent - before falling back to $1.86 on Friday, typified the stockmarket's experience during the same period.
"We went from 4100 [points] at the beginning of the year and got to 5200 - that was quite a significant run before we had a selloff," he said.
Shares in Billabong International and Discovery Metals, both the subject of takeover talks, had a miserable year and were the bottom two performers, shedding 85.58 per cent and 91.46 per cent respectively.
Mr Morgan expected healthcare stocks to continue to strengthen in the next financial year.
"If you think the Australian dollar is headed lower, it is one of the most sensitive sectors and there are stocks that had been left behind. They've started to move now, like Sonic," he said.
Mr Morgan said some resources firms could experience a turnaround towards the end of the calendar year after a few more months of struggle as the Chinese government reforms its economy.
"We think it's not terminal, certainly for the mining companies. Mining services might still be in for a tough time. For mining companies, we think there's just a little hiatus before the new Chinese leadership gets its feet under the desk and starts its new reform program towards the end of the year."
On the broader All Ords, travel related companies, such as Flight Centre and Corporate Travel, raked in strong gains of 110.46 per cent and 109.79 per cent respectively.
Business consolidators Greencross Vets and G8 Education also made it into the top 10, while software firms Altium and Infomedia's success as one of the best performing stocks showed that they were "unsung Aussie success stories", Mr Dennis said.
The search for yield was an important theme for the markets as the Reserve Bank eased the cash rate by 75 points during the financial year.
"We saw in early October a change of heart by investors. They were tiring of getting minimal return on their cash sitting in term deposits and bank accounts, and we saw a bit of a move back into the high-yielding stocks," Joseph Palmer & Sons director Alex Moffatt said.
Mr Moffatt said the unwinding in global financial markets in the past two months was "surprisingly vicious" and he expected investors to remain cautious on the sharemarket for the next six to nine months.
Sirius Resources ▲ 3547.06%
Magellan Financial Group ▲ 384.32%
Bluescope Steel ▲ 159.44%
G8 Education ▲ 152.58%
Flight Centre ▲ 111.46%
Sundance Resources ▼ 78%
Silver Lake Resources ▼ 79%
Perseus Mining ▼ 82%
Billabong International ▼ 85%
Discovery Metals ▼ 91%