Blue chip shock: the best and worst shares of the year
Many of Australia's biggest companies are absent from the list of top performers in the 2015-16 financial year.
Only six of the top 50 Australian companies made it into the 20 best-performing companies, including Newcrest Mining, up 79% on the back of the soaring gold price, Medibank Private (up 53%), Sydney Airport (45%), Scentre Group (38%), Asciano (35%) and Transurban (34.8%).
But the regulars, such as the big banks and BHP Billiton, tended to be among the worst performers. For example, BHP Billiton plunged 28%, while Santos fell 29%, ANZ lost 20% and National Australia Bank slid 15%. Eleven of the top 50 companies were among the 20 worst performers.
In fact, it was the year when the mega caps underperformed, as measured by companies in the ASX 100, according to David Cassidy, the Australian share strategist at UBS.
The ASX top 20 index dropped 7%, significantly underperforming the broader market, which fell only 4.1%. But investors should take heart: returns from dividends helped propel the market to finish the financial year 0.6% higher.
Cassidy says the market fell on a drop in earnings expectations, which was offset by a small price earnings multiple rerating.
It was largely the banks and resources sectors (energy and mining) that underperformed. The banking sector slid 10.4% while resources lost 12%. If these two sectors were left out, the market would have gained 10.7%. The contagion spread to insurance companies, which lost 3.8%.
The good performers were industrial companies (excluding financials) and yield sectors such as infrastructure (up 40%) and A-REITs (24%).
Small-cap stocks did well and the small-cap gold companies had a spectacular year, with the gold sector soaring 94%.
Cassidy believes the banking sector is oversold on bad debt and capital fears.
The best and worst shares of 2015-2016