Getting Started in Shares For Dummies Australia. Dunn James
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Название: Getting Started in Shares For Dummies Australia

Автор: Dunn James

Издательство: John Wiley & Sons Limited

Жанр: Зарубежная образовательная литература

Серия: For Dummies

isbn: 9780730320630

isbn:

СКАЧАТЬ their debt obligations, bond premiums spiked, and the risk of European economies being unable to meet their debt repayment schedule led to a secondary, highly damaging European economic crisis from 2011 to 2013. In June 2015 the Greek electorate voted to reject the terms of an extended EU bailout (effectively a second bailout), causing stock markets around the world to tumble. In July 2015 Eurozone leaders reached a deal on a third bailout package, which started to flow in August 2015. But Greece’s problems are definitely not solved – there are still concerns about its bailout and arguments with its creditors raging at the moment – but it seems the markets moved on to worry about other, bigger things (like China).

      In 2012, a new Japanese government tried economic shock therapy in the form of an all-out assault to jolt the long-moribund Japanese economy out of recession, based on creating massive fiscal and monetary stimulus, making company tax cuts and weakening the yen to increase the competitiveness of Japan’s exporters. There was some initial success for the ‘Abenomics’ program – named after Prime Minister Shinz Abe – but by mid-2015, Japan was back to its familiar state of zero growth.

      In the US, the years 2008 to 2012 were the worst four consecutive growth years since the 1930s. The US economy had been trying to mount a recovery, with GDP growth reaching 2.4 per cent in 2014, but America’s economy was reported to have shrunk in the first quarter of 2015 – the first contraction since the second quarter of 2009. The Congressional Budget Office now says the US economy grew by 2 per cent in 2015, however it projects stronger growth (2.7 per cent) in 2016 before dropping again (2.5 per cent) in 2017. The US has now held interest rates near zero for nearly a decade, and in mid-2015 the IMF, for the first time, urged the Federal Reserve to hold off raising rates to avoid potentially stalling the US economy and wreaking havoc in global markets.

      The IMF expected global economic growth to slow in 2015 to its weakest rate since the GFC, as China and other emerging markets decelerate and advanced economies continue to struggle to shrug off the legacies of the crisis. The final IMF figure for world economic growth in 2015 came in at 3.1 per cent, the weakest since the global economy contracted in 2009. More positively, however, the IMF expects global growth to rise to 3.5 per cent in 2017.

Bouncing back from the GFC: Sharemarket recovery

      The GFC was the greatest crash of them all, but slowly, painfully, sharemarkets began to recover:

      

The US market was the first of the major markets to recover fully from the GFC. It took just over four years for the S&P 500 and Dow Jones Industrial Average to get back to their October 2007 levels, but now they’ve left that pre-crisis mark well behind on their way to record highs – the S&P 500 is now 36 per cent above the level from which it fell in October 2007, while the Dow Jones is 27 per cent higher.

      

The Financial Times Stock Exchange 100 (FTSE 100, or the Footsie) in London finally recovered all its lost ground by December 2013 – but has since slipped back below its 2007 peak.

      

The Japanese Nikkei 225 got back to its 2007 peak in February 2015, and is 13 per cent higher than its 2007 peak (but still a long way short – 47 per cent short, in fact – of its all-time high, reached in December 1989).

      

The Hang Seng in Hong Kong has mounted a strong recovery from its 2009 low-point. It’s up 90 per cent from there, but it remains 22 per cent lower than its 2007 peak.

      In Australia, the recovery has seen similar challenges to many global markets. The S&P/ASX 200 Index is still 16 per cent shy of its 2007 peak, despite having risen 60 per cent from its 2009 trough. The same divergence of performance can be seen in stocks. Commonwealth Bank was the first of the Australian banks to regain its pre-crash peak, which it did in October 2012; it now trades 47 per cent above its 2007 peak. Westpac followed in January 2013, and has now risen to 20 per cent above its 2007 peak. ANZ Bank got into clear water in April 2013, and has subsequently added an additional 7 per cent. But National Australia Bank has not yet recovered its pre-GFC high, and remains 19 per cent short of it.

      BHP briefly regained its 2007 high-water mark in March 2011, but then lost value in the iron ore slowdown of 2011 to 2014; BHP now trades at 37 per cent below its 2007 peak. Rio Tinto has never recovered its pre-GFC peak, and is still 55 per cent lower. Telstra was back at its 2007 peak by March 2013, and has moved 33 per cent higher. Wesfarmers and Woolworths both got back to clear water on their share price in February 2013, but have diverged since then, as Wesfarmers’ Coles operation has consistently beaten Woolworths on sales growth: Wesfarmers trades 6 per cent above its pre-GFC peak, while Woolworths has slipped back to fall 16 per cent short (having lost 29 per cent from mid-2014 to mid-2015).

      These companies are all strong businesses, but they can never be considered to be immune to a general market slump – which, thankfully, is a rare event! That’s one of the risks of share investment, but this risk is why stocks generally perform better than other investments over the long term.

      Individual company share prices are fluctuating all the time, and can suffer big falls, as well as spectacular rises. This can be due to company-specific factors, as well as events and sentiment changes that affect the market as a whole. The GFC and the crash it inspired is an extreme example of what causes sharemarkets to fall, but it’s also an example of how – although it can take a long time – the best stocks, and markets in general, do recover.

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