Predictably unpredictable, the market has turned up some first class surprises over the past year. Here are some of the best and the worst.
House prices
Perhaps even more surprising than the sharemarket recovery, we find house prices did not fall over the course of the last 12 months — the average price in the five main capital cities is up by 2 per cent.
The resilience in house prices happened came despite major banks forecasting prices would drop by at least 10 per cent. In reality the worst we saw was a brief 2 per cent dip. Immigration, the fuel for house price increases, is virtually at a standstill and yet there was no extended downturn; even for seasoned observers the surprise was dramatic.
Fortescue
Iron ore carries the hopes of a nation, not to mention the fortunes of West Australia on its back. This week the iron ore ‘‘pure play’’ Fortescue saw its market capitalisation rise above Westpac.
There are several explanations for the iron ore price but the two essential ingredients were further missteps by Brazil’s Vale and a powerful rebound in China import demand. Six months ago iron ore was $US84 a tonne, now it’s $US176 — surprises don’t get bigger than this.
Afterpay
In the March crash it fell to $8 and the buy now, pay later leader was briefly friendless.
But the revenues — as opposed to profits — powered ahead through the year as the group continued a high risk strategy to conquer the world. The share price is now comfortably north of $100, making Afterpay a rank and file member of the exclusive ASX 20. The risk is that a global giant such as Apple or PayPal will move to squash the upstart; the surprise is it didn’t happen in 2020.
Banks
Banks were given their mojo back by government decree. The plan to relax responsible lending laws coupled with the removal of dividend payout restrictions combined to make bank stocks attractive once more with the extra prospect of dividend yields near 5 per cent.
Tesla
This week the diversified electric carmaker joined the all-important S&P 500 on Wall Street after a sevenfold increase in value this year. On joining the index Tesla immediately became the sixth-biggest listed company in the US. Not bad for what had been a favourite among short sellers all year. Electric cars and the wider US market will never be the same again. By the way, Tesla fell 7 per cent in its first trading session. It remains the most shorted stock in the world with an estimated $US32bn bet against it.
Bitcoin
Three years ago the digital currency almost reached $US20,000 and it seemed like crypto would go mainstream. In 2020 it came back with a vengeance, breaking that record in recent weeks. Moreover, this time there is heavyweight institutional money backing Bitcoin with support from Citi and PayPal. A single manager, the New York-based Grayscale Bitcoin investment trust now manages $13bn worth of digital assets. Crypto is not going away.
The also-rans:
● Just when you thought things couldn’t get any worse at AMP, they did.
● After initially making it almost impossible to get money out of super, the government opened the sluice gates and $36bn left the system (at last count).
● Rio Tinto, which once had a strong reputation in dealing with Indigenous issues, blew up the 46,000-year-old rock shelters at Juukan Gorge.
● Digital hopeful Xinja bank failed badly in its effort to create a neobank even with a licence and a government guarantee.
● QBE insurance managed to disappoint everyone yet again, this time with a $1.9bn loss two years after announcing its last $1bn-plus loss.
● The ASX tech index started with a whimper and ended the year with a bang — the all tech index is up 42 per cent year to date, the ASX 200 is flat.
Coming up, we’ll have the six potential surprises coming down the line in 2021.
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