The best and worst performers on the share market this week
In the last week there have been protests around Australia organised by the Extinction Rebellion with the aim of shedding light on environmental issues in an effort to get the government to take action. Regardless of what you think about these protests, I believe as a nation, it is important that we look after the environment.
So, what companies are paving the way to support a better environment?
While there are many companies that fit the bill, unfortunately not all of them are listed and for those that are listed many are very small and illiquid, which makes it challenging to invest.
For example, Renu Energy, which is involved in geothermal power, has risen 115% this year, yet on average less than $30,000 is traded in the stock each day, which makes it high risk. Other stocks include mpower, which is up 140% and Carnegie up 150% this year. Mpower is involved in solar farms, battery storage and microgrids while Carnegie harnesses ocean energy but like Renew Energy, both of these stocks are very illiquid, which means they are also high risk investments.
If you do want to support the environment and you like these types of investments, then you may want to invest directly. In saying that, you need to be conservative with your expectations and the returns you will achieve; therefore, make sure whatever you invest in does not break the bank.
Alternatively, you could invest in these innovative companies through ETFs. While I am not normally a big fan of these investments, in these specialist areas this can be an ideal way to gain broad exposure with lower risk.
You still need to do your research, as there are many ETFs ranging from environmentally responsible to ethical, sustainability and more and so you will need to ensure you are investing in the areas you want to support. In the coming years, I expect environmental companies will gain momentum with certain companies listing, while others will attract capital raisings, takeovers, and expansion, which will be exciting to watch. Given this, it is my expectation that ETFs that invest in this area will do well over the longer term.
Best and worst performing sectors this week
In another relatively flat week, Healthcare was the stand-out performer up more than 5% while Sonic Healthcare, CSL and Cochlear are all doing well. Utilities is up more than 3% while Consumer Discretionary and Consumer Staples are both up more than 2%. The worst performing sectors include Information Technology down more than 1% followed by Materials and Financials, which are both just in the green.
The best performers in the ASX/S&P top 100 stocks include Crown Resorts up more than 20% followed by Sonic Healthcare up more than 9% and Ampol up more than 8%. The worst-performing stocks include Mineral Resources down more than 7%, while Worley, AMP and Appen are all down more than 5%.
What's next for the Australian share market
The Australian stock market has looked a little stronger this week, as it has closed higher on three of the last four days, although we need to watch where it closes today, as this is more important than what unfolded earlier in the week. A high close would be a positive sign that the market may be getting stronger and close to breaking up out of the sideways move it has been in over the last three months. That said, my opinion has been more bearish and I believe that probability suggests it should trade lower in the short term, although I am not discounting that it will rise. For me to change my mind, we need to see the All Ordinaries Index trade above 7200 points.
Right now, there are many good stocks that are setting themselves up for the next bull run. So regardless of whether the market does fall for a brief period, I am confident once this sideways move is broken, the Australian stock market will do well in the second half of 2021. I still believe that the Energy, Materials and Financial sectors will do well moving forward.