Rudi’s View: Australia Remains Outside The AI Party

Rudi's View | 10:00 AM

Notes and colour on what exactly is going on beneath the surface of the Australian stock exchange.

By Rudi Filapek-Vandyck, Editor

The one statistical observation that captures the Australian share market in a nutshell, including the recent August results season, was buried deep inside a general market report by Macquarie analysts last week.

A table depicting the contributions to the ASX200's total return over the past twelve months shows only four broad sectors with a positive return: Materials, of course, followed by Energy and Consumer Staples, and, lastly, a minimal contribution from Utilities.

That's it. Four sectors. All others have gone backwards, with Technology (-35.8%) and Healthcare (-20.3%) the heaviest losers, despite sector leader CSL ((CSL)) being among the better performers for the season, up 39.4%, followed by Ansell ((ANN)), Australian Clinical Labs ((ACL)) and Ramsay Health Care ((RHC)).

Note also that the Materials and Energy sectors have rallied by 44.4% and 17.5%, respectively, with BHP Group ((BHP)) shares up more than 50% (circa 57.4% including dividends) and yet, the total return for the ASX200 remains below 5%, of which 3.5% stems from dividends.

I don't think anyone needs an in-depth explanation of what these observations imply for the average investor: it is much easier to find oneself on the wrong side of market momentum when running a broad, diversified Australian equities portfolio.

Some Winners, Many More Losers

As always, for every small-cap technology stock that missed the mark --think Hansen Technologies ((HSN)) and Weebit Nano ((WBT)), but also IDP Education ((IEL)) and Iress ((IRE))-- there has been a strong rally for the average gold miner, with Resolute Mining's ((RSG)) 47% gain the primus inter pares.

But the numbers tell us the odds were not particularly favourable overall.

Consider, for example, the average share-price return from the release of August results until last Friday was minus -0.5%.

While the season was marked by an almost exclusive focus on each company's outlook, rather than on the financials released during the month, 186 of the 380 assessments in the FNArena Monitor still managed to generate a positive response on the day of release.

But, as highlighted by Goldman Sachs' data analysis, most stocks have retreated from their initial response, by an average -2%.

FNArena analysis shows that, of the 186 share prices that gained on results day, 112 (60%) had given up at least part of those gains by Friday.

Of those, 54 are now in negative territory, meaning they have surrendered all their previous gains and then some.

Examples that come to mind include Zip Co ((ZIP)), Superloop ((SLC)) and Telix Pharmaceuticals ((TLX)).

Measured over the three days following the result, the median share-price return is a positive 0.5%, but by Friday that percentage had slumped to a negative -1.8%.

I've written this before: in 2026, it very much feels as though the world is enjoying a broadening of the AI-inspired bull market for equities, but Australia has not been invited to the party.