Firstly, we would like to wish our readers all the best for Christmas and a very happy and prosperous 2025.
The ASX has returned approximately 15% in 2024 YTD, when combining price and dividends. Whilst this return is strong, it is certainly not unusual. In fact, over the past 150 years the ASX has returned between 10% – 20% 50 times or one third of the time. Over this period, the market has risen 80% of the time on an annualised basis. Down markets occur far less frequently. Notwithstanding, the fear of loss (i.e. loss aversion) is a powerful financial emotion. People often avoid financial opportunities due to this aversion to potential loss. It is important for investors to understand not only the importance of careful portfolio management, but also appreciate the psychology of investing.
During the year, 30 ASX listed companies (over $200m mkt cap) have been removed from our exchange due to take-over. Not since pre-GFC have we seen this level of interest in listed businesses.
In the US, the market (S&P 500) is up 28% including dividends YTD.
Key Themes (USA)
Trump
The Trump administration has indicated intentions to lower tax, cut red-tape, and offer more protection to US manufacturers through increased tariffs. What pre-election policies materialise remains to be seen.
China
Many companies, including luxury businesses like LVMH and tech businesses such as AMD, reported a hit to earnings from lower sales into China. Markets got excited when the Chinese government announced a series of stimulus measures designed to boost growth.
Artificial Intelligence
Robust demand for AI has resulted in better-than-expected earnings from semiconductor designers and manufacturers, such as NVIDIA, Broadcom and TSMC. At the moment, these companies appear to be the “picks and shovels” winners to the AI theme.
We look forward to whatever the market has to offer in 2025. Have a relaxing break, and recharge for what should be an interesting year.
Alex Leyland
Alex.leyland@leyland.com.au