australian stocks gain a tepid 1 1 per cent during 2014 905032015

There is further evidence that China’s manufacturing sector is in the midst of a slowdown

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By :  ,  Financial Analyst

The ASX ended 2014 with just a 1.1 per cent gain for the year. The S&P/ASX200 ended the last day of trade at 5,388, while the All Ordinaries index closed at 5,411, with both indices down by 0.1 per cent, according to ABC.

The year’s biggest winners, in terms of a change in share price not counting dividends, were Qantas Airways Ltd (ASX:QAN) (+119.2 per cent), Recall Holdings Ltd (ASX:REC) (+77.10 per cent), Caltex Australia Ltd (ASX:CTX) (+70.60 per cent), Orora Ltd (ASX:ORA) (+68.10 per cent) and Alumina Ltd (ASX:AWC) (+61.00 per cent).

The top losers were Worleyparsons Ltd (ASX:WOR) (-39.30 per cent), Metcash Ltd (ASX:MTS) (-41.30 per cent), Santos Ltd (ASX:STO) (-43.60 per cent), Monadelphous Group Ltd (ASX:MND) (-49.50 per cent) and Fortescue Metals Group Ltd (ASX:FMG) (-52.90 per cent).

Latest data from China indicates a further sign of weakness in its manufacturing sector. The country’s National Bureau of Statistics said on Thursday that the government's official manufacturing Purchasing Managers Index slipped to 50.1 in December from 50.3 a month earlier. It was the lowest reading in eighteen months, according to the Wall Street Journal. "China's manufacturing sector, especially those industries related to the property market, is still struggling," said Li-Gang Liu, an economist at ANZ Bank. "China is entering a 'new normal' economy." The data has disturbing implications for Australia because China is its largest export goods destination.

According to statistics from the RBA, home loans grew 0.6 per cent in November over the previous month and 7.1 per cent during the year ended November 30. However, lending to housing investors grew at a 10 per cent annual rate, the strongest seen since March 2008, according to The Australian. On the other hand, growth in business credit was a more muted 4.6 per cent. "To date the most obvious transmission from low policy rates through to the monetary aggregates in this cycle has been seen in investor housing activity," JP Morgan economist Ben Jarman wrote in a note on the data, as per ABC. "By contrast, RBA officials have bemoaned a lack of 'animal spirits', which is restraining appetite for corporate expansion and real investment,” he added. The figures point to a real risk that the current ‘rebalancing’ of the Australian economy could stall, according to Business Spectator, increasing the likelihood of the RBA implementing interest ratecuts during 2015.

An updated industry code of conduct stipulated for the AU$144 billion franchise industry will become effective today, reports ABC. The new code lays an emphasis on more exchange of information and transaction transparency, as well as an enforceable obligation on both sides of a franchise agreement to act in good faith. "It's all about doing the right thing by your business partner, keeping that adult-to-adult, mutually supportive, shared purpose relationship," said Small Business Minister, Bruce Billson. "That's what good franchising is all about; that's why it's so popular."

Australia’s agricultural exporters have benefited to the tune of millions of dollars in 2014 after Australia’s currency broke down through parity with the US dollar. Australian almond exporters struck it rich, benefiting both from higher almond prices due to droughts in California and Spain, as well as currency gains, said ABC. The global trade in almonds is conducted in the Aussie dollar.

Find up to date information on the ASX at City Index.

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