The last quarter has been a rocky ride for the global share market. We look at some sectors and companies that have held their own in recent times, and those facing a tough road ahead.
It’s an understatement to say that 2020 got off to a rocky start. As the COVID-19 crisis wiped out any recovery following the devastating bushfires, businesses around the country began to count the cost.
While no-one is exempt from the impacts of this extraordinary time, some sectors have fared better than others. We look at who’s lost out over the past quarter, and who’s riding out the crisis with confidence.
First, what’s the damage?
As social distancing measures and lockdowns affecting large sectors of the economy were applied in late March, there was an immediate negative impact on the share market. By the end of the first quarter, the benchmark ASX 200 had fallen 24% – around $500 billion – its worst quarter in over a century.
First, the losers
Some sectors were hit early – and hard. As gatherings of large groups of people were restricted, aviation, events and tourism businesses saw their business-models collapse overnight.
In an effort to stay afloat, Qantas slashed routes and staff as its share price fell from $7.16 at the start of the year, to just $2.14 on 19 March. Meanwhile, Virgin Australia failed to hang on to its tenuous hold on the market, entering bankruptcy proceedings in late April.
Events company Event Hospitality and Entertainment Ltd, which owns cinemas, hotels and Thredbo ski resort, lost over half its value – falling from $14.28 on 14 January, to a low of $6.00 on 23 March.
Even the banks were not immune. On 14 February, Commonwealth Bank’s share price was $90.00. By 23 March it was $54.26.
And the winners
The negative impacts have spared few on the ASX – and it’s likely too early to call who the winners will be. However, two key sectors have shown resilience to the current crisis, while other companies have thrived in the lock-down environment.
Healthcare has been one of the best-performing sectors on the share market over the past quarter, as COVID-19 focussed minds and dollars on medical equipment and care.
After starting the quarter at $20.97 per share, Fisher and Paykel Healthcare Corp Ltd has defied the market direction to trade almost a third higher, at $30.23 on 30 March.
As customers raced to fill their cupboards with essential items, the consumer staples sector, including companies like Coles and Woolworths, were spared. After crashing to a low of $14.21 at the end of February, Coles Group rebounded quickly to $17.22 by 17 March. This came as the sector saw sales growth of around 20-30%, based on strong demand for food, groceries and liquor.
IT and telecommunications
As people were confined to home, the need for remote working options, video conferencing, data and reliable internet service increased.
In Australia, accounting technology company Xero fell from $89.00 on 19 February to $58.75 on 12 March, before clawing back much of its value to post $79.88 on 27 April.
Speak with us to find out more
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Taken from Count’s Now & Next Winter 2020 Edition