Last year was a great one for equities. With the market up more than 35%, there were few losers, with the notable exception of resources companies.
Most of our 2004 list of winners had a good year on the JSE. The group slightly outperformed the market, with a 36% return to investors if companies' returns are averaged. During the year our 10th-placed company, Aplitec, delisted in favour of a New York listing, and was excluded in calculating the averages.
But there were disappointments. Four companies delivered a negative return to shareholders and they all had one thing in common - they operate in the resources sector. Our top-rated company last year, Mvelaphanda Resources, had a torrid year, registering by far the largest loss (-48%). Mvela's interests include stakes in Gold Fields (5th last year), Northam (14th) and diamond miner Transhex. The other three suffered the same malaise to lesser degrees - Impala Platinum (2nd), Gold Fields and Northam Platinum - all battled to keep on mining profitably under the pressure of the strong rand.
But some companies that have a similar foreign-denominated revenue stream managed to beat the odds. BHP Billiton (16th) and Sasol (15th) both had good years, delivering 36% and 44% returns to their shareholders respectively. Both were helped by record oil prices, which outdid the negative impact of the strong rand. Another to break the trend is Mittal Steel (7th when it was Iscor), thanks to record steel prices and the insatiable appetite in China for the metal.
Another company that is also exposed to the rand, Altech (13th), still managed to beat the average, thanks to quick and successful diversification from its export-based electronics business.
The star performers last year were clustered around banks and retailers, though the best return came from Grindrod (6th), the Durban-based shipping and logistics company. Because many of its ship purchase contracts were struck at the bottom of the rand's weakness against the dollar, Grindrod has been raking in the cash as the rand has appreciated.
In retail, Edcon (20th, 84% up), Massmart (12th, 51%) and Pick 'n Pay (4th, 33%) delivered a strong performance. There's no doubt 2004 was probably the year for retailers as consumers continued a low-interest-rate-fuelled spending binge. Italtile (17th) had a good year for the same reasons: spending on homes and new construction has also benefited from cheaper debt. Construction group Murray & Roberts (19th), however, failed to deliver the same performance, pulling down the average with an 11,3% return.
The banks have also been beneficiaries of the debt binge, growing their assets at break-neck speed. Standard Bank (18th), the only bank on our list last year, delivered a return of 49%.
Another industry to do well is health - particularly Afrox Health (11th), which gave shareholders a vigorous 78% return last year. Netcare (9th), though, did not do nearly as well, with only a 20% return to shareholders.
