Canberra observed Gold glitters in 2018 – while coal, iron ore and petroleum companies languish 2018 was a poor year for most resource companies listed on the ASX, but it was even worse for the companies that are included in the All Ords Index (AOI). The market capital of the resource companies listed in the top 150 companies declined by 2.1% from $281 billion at the start of the year to $275 billion at year’s end, while the AOI declined by 8.2% from 6230 to 5716 over the same period. The better performance of resource companies relative to the average listed company is consistent with the longer-term results from 2000. Figure 1 shows how the AOI and the market capital of the resource companies have changed over the last 18 years, with the values normalised for changes in the Consumer Price Index (CPI). When the AOI is adjusted to 2018 $A, it has risen from 5070 in July 2000 to 5716 at the end of 2018. This is equivalent to an increase of approximately 0.7% per year and is not a good capital gain. It pays to make sure you invest in companies that pay good annual dividends! Meanwhile, the market capital of the top resource companies has risen from $127 billion to $275 billion in the same period, at an average increase of 6.3% per year. As one would expect, there is more volatility in the resource industry than in the AOI but, if your timing is right, the rewards are more substantial. The glittering gold The small decline in value of the resource companies during 2018 was cushioned by the spectacular rise in the value of the companies producing and exploring for gold. Table 1 shows how the value of the main companies in the top 150 ASX companies fared during 2018. The numbers in the table are in $A billions, or show the percentage changes over 2018. The companies have been grouped according to their main commodity David Denham AM Associate Editor for Government denham1@iinet.net.au 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 0 100 200 300 400 500 600 All Ords Index Market capital in $Abillion Totals CPI adjusted Figure 1.  Market capital of the resource companies listed in the top 150 companies on the ASX from July 2000 through December 2018, and the AOI for the same period. The numbers have been normalised to December 2018 $A using the Australian Bureau of Resources CPI. Table 1.  Market capital changes for 2018 January 2018 December 2018 Change % BHP 98.213 100.011 +2 Rio 32.271 28.984 −10 Fortescue 16.658 12.788 −23 Yancoal 5.934 5.156 −13 Whitehaven 4.637 4.514 −3 New Hope 2.119 2.759 +30 Woodside 29.123 29.348 +1 Origin 16.840 5.908 −32 Oil Search 12.204 10.878 −11 Santos 11.560 11.393 −1 Beach 3.004 3.064 +2 Newcrest 17.873 16.187 −9 Evolution Min 4.434 6.794 +53 Northern Star 3.649 5.908 +62 Ocean Gold 2.106 2.966 +41 St Barbara 1.976 2.464 +25 Regis Resources 2.182 2.426 +11 Saracen 1.401 2.337 +67 All Ords 6230 5716 −8 Market Capital 284.78 274.89 −3 Miscellaneous Coal Petroleum Gold 18 PREVIEW Canberra observed FEBRUARY 2019