What has happened…while other indices like the S&P 500 have enjoyed double digit gains, our own market has gone nowhere. At the start of the year, the ASX 200 was trading at 5,700 points. It now trades around 5,655 points.
Source: Google Finance
What’s holding the market back?
It would seem the telecommunication sector is having a big impact on the market’s overall returns. Take a look at the chart below.
But this probably isn’t surprising considering many of our biggest telco (telecommunication) stocks are down more than 20% this year. Vocus Group Ltd [ASX:VOC] has seen the worst fall among the billion-dollar telos, dropping more than 37% year to date.
But even though the market has remained flat, you still could’ve made some amazing returns in 2017. Had you bought A2 Milk Company Ltd [ASX:A2M] at the start of the year, you would have made more than 2.5 times your money. Had you bought Bega Cheese Ltd [ASX:BGA] you would have made a 65% return.
Below is a list of the five best and worst performing stocks this year.
There seems to be no relation between the bottom five. While there are two pharmaceutical stocks in the bottom five, among them is a food and beverage company, a telco and a retailer. Bit of a mixed bag.
But in the top five performers, I would argue four are profiting from one trend — rising incomes in Asia.
With higher incomes, Chinese consumers in particular are buying Aussie branded products like A2 milk baby formula and Bega Cheese products. They’re also buying Aussie produce which among the providers is Costa Group Holdings Ltd [ASX:CGC]. The wealthier families are also traveling overseas more frequently, a popular destination being Australia.
Will this market trend continue?
Simple answer, yes. However there are debates about the size and timing of Asia’s population entering the middle income class. If you wanted to learn more about how you could profits from Asia’s rise, particularly China, check out Money Morning’s 2017 report ‘China’s New Boom’.
Junior Analyst, Money Morning