The ASX top 10 ? then and now

Following the fortunes of the ASX’s top stocks over the decades is instructive for investors.

PORTFOLIO POINT: Miners and financial stocks were even more dominant in the market’s top 10 in 1948 than they are today.

Long-term averages mean very little if they don’t go back far enough. Investors often find it frustrating that comprehensive company and market data only goes back to the mid-1980s, while complete digital information only really started in 1995. But a new project may change this by providing data back to 1948, and potentially as far back as 1900.

The Australian Centre for Financial Studies (ACFS) and ANZ Trustees this week launched a project called the Australian Equities Database. The three-year project is a remarkably ambitious venture that hopes to seal a large gap in our full understanding of stockmarket patterns in Australia.

Acutely aware of the changing nature of the ASX, Eureka Report asked head of the project, ACFS research fellow John Fowler, to preview the database by compiling a historic list of the top 10 stocks each decade back to 1948 '¦ and it’s intriguing.

While the stocks on the list from 1948 may bear little resemblance to those in your portfolio today, ACFS director Deborah Ralston says it is instructive to study the wider implications of the lists, such as how companies in a particular sector performed during booms and busts, or in secular bull and bear markets.

The project was launched on December 14 as a concept. Ralston says it will be rolled out through 2012, initially to universities and researchers and then to the public.

The database includes such information as share prices, price/earnings multiples, market caps and the number of shares on issue, as well as fundamental company data like dividend payments and returns.

Fowler says even though the coverage of data is only 75–90% complete, it’s already yielding information that many investors have forgotten. One of these is that while market volatility was highest in the 1980s, due largely to the extremes seen in the 1987 crash, the 1970s were far more volatile and it may be that we’re heading into a similar period.

Another is that BHP Billiton, the must-have company for your portfolio, has been the largest company by market capitalisation since 1948 – except 1998, when it was eclipsed briefly by Telstra. Those with long memories will also find it fascinating to watch how companies can fade (CSR), stay on top (BHP), or more often simply disappear (whatever happened to Ampol?).

May 1948

Company
Market cap ($m)
BHP
81.9
CSR
70.2
Bank of New South Wales
46.2
ACI International
34.2
North Broken Hill
30.6
Australasia Bank
25.7
MIM
20.5
New Broken Hill Corp
19.2
Commercial Banking Co of Sydney
19
National Australia Bank
18.8

Three companies that were listed in May 1948 are recognisable as mainstays of investors’ portfolios today, but only two remain in the top 10. They are BHP Billiton (then BHP), CSR and NAB. Investors concerned about financial and mining stocks dominating the list should note that they held even more sway in 1948 than they do today.

May 1958

Company
Market cap ($m)
BHP
265.4
Coles Group
108.4
CSR
93.5
MIM
78.8
Bank of New South Wales
78.5
EZ Industries
70.3
ACI International
70.2
Consolidated Zinc
64.1
Industrial Acceptance Corp
64
Tooth & Company
58.5

MIM, aka Mount Isa Mines, was Australia’s largest miner in 1955, but still couldn’t knock BHP of its throne three years later. It wasn’t until 1959 that Consolidated Zinc left the list, when it merged with Rio Tinto to form CRA. And although Industrial Acceptance Corp won’t be familiar to most, it was a foundation of the modern Citibank, which fully took it over in 1977. The brewer Tooth & Co was delisted in 2010.

May 1968

Company
Market cap ($m)
BHP
3,049.10
North Broken Hill
1,583.40
Conzinc Rio Tinto
1,489.50
Hamersley
1,250.00
MIM
748.9
Western Mining Corp
660.2
CSR
362.7
Myer Emporium
294.7
New Broken Hill Corp
235.8
Ampol
196.3

The Australian Motorists Petrol Company – also known as Ampol – made it into the ASX top 10 only 20 years after it listed. And although it no longer exists – after merging with Caltex in 1995 – vestiges of Ampol still remain in rural Australia, where many are still loyal to the company.

May 1978

Company
Market cap ($m)
BHP
1,558.50
Conzinc Rio Tinto
826.6
MIM
643.3
Hamersley
567.6
Bank of New South Wales
404.3
CSR
379.2
Australian Guarantee
325.5
ANZ Banking Group
324.5
National Australia Bank
305.4
Coles Group
290.9

Bank of New South Wales remained in the top 10 until 1978. It was taken over by Westpac in 2000. This was also the year ANZ appeared in the lists, after Australasia Bank (a 1948 top 10 member) and Union Bank of Australia merged. Meanwhile, in the grocery sector, Coles made it back into the top 10 after achieving its aim in 1973 of having a supermarket in every Australian capital city. Market caps in the 1970s were slightly lower than in the 1960s thanks to a decade of stagflation, low growth and the end of the 1960s mining boom.

May 1988

Company
Market cap ($m)
BHP
13,488.20
Westpac Banking
7,335.10
Alumina
4,884.50
Conzinc Rio Tinto
4,735.50
National Australia Bank
4,557.10
Elder Smith Goldsbrough
4,516.10
ANZ Banking Group
3,903.20
Origin Energy (Ex Boral)
3,449.90
Coles Group
3,309.00
News Corp 'B' (Lon)
3,062.90

Comparing the market capitalisations of companies in the ASX top 10 in 1978 and 1988, the year after the crash, indicates just how much of a boom there was in the intervening years. BHP grew nine-fold between 1978 and 1988, despite the value stripped from the market the year before, while all other companies in the top 10 finally hit billion-dollar market caps.

May 1998

Company
Market cap ($m)
Telstra
48,378.40
National Australia Bank
32,056.30
BHP
28,218.10
Westpac Banking
20,305.60
ANZ Banking Group
17,457.20
Commonwealth Bank of Australia
17,346.00
Rio Tinto
12,363.10
Amatil
11,708.30
Lend Lease Group
8,558.90
Coles Group
8,276.10

This was the year BHP was knocked off its perch. After name change and a partial listing, Telstra shot straight to the top of the ASX as the biggest company in Australia, although investors know only too well that the following years were not kind to the telco or to its starry-eyed shareholders. NAB took second place in this year after almost 20 years of rapid expansion via acquisitions. This was a peak period for the bank as problems emerged from 2000 onwards within its subsidiaries (it lost $US2.2 billion in its US venture, Homeside) and after revelations in 2004 that two foreign exchange traders lost the bank $360 million.

May 2008

Company
Market cap ($m)
BHP Billiton
145,989.50
Rio Tinto
63,040.60
Commonwealth Bank of Australia
56,123.10
National Australia Bank
53,778.30
Telstra
49,262.70
Woodside Petroleum
44,741.50
ANZ Banking Group
44,241.10
Westpac Banking
44,042.10
Woolworths
33,851.00
Westfield Group
33,244.40

Just months before the financial crisis companies were still, largely, flying high. Rio Tinto was fresh off its debt-fuelled Alcan acquisition and would soon be at risk of falling into the hands of Chinalco or BHP; Sol Trujillo was still at the helm of Telstra; and the fact that Westfield Group – that leading light of property trusts before the crash – was in the top 10 indicates the aura of excitement surrounding property during that decade.

December 15, 2011

Company
Market cap ($m)
BHP Billiton
114,567.80
Commonwealth Bank of Australia
77,815.08
Westpac Banking Corp
63,003.60
ANZ Banking Group
55,005.23
National Australia Bank
52,490.16
Telstra Corp
40,688.85
Wesfarmers
35,669.48
Woolworths
31,566.15
Rio Tinto
27,522.54
Woodside Petroleum
25,483.41

Looking at the market caps for the 10 biggest companies on the ASX today, you’ll see how far some companies have moved from their positions in 2008. Rio Tinto is one example, with its market cap falling 56%, while all the big four banks (except NAB) have grown and now hold second to fifth place on the table. And as testament to Wesfarmers’ five-year turnaround plan for Coles, the group is now bigger than rival Woolworths.