- Sector analysis provides broader view of the stock market.
- As per the Global Industry Classification Standards (GICS) standards, ASX market is categorised into 11 sectors.
- The top performing sectors are consumer discretionary, information technology, materials, and finance.
With more than 2,000 companies listed on ASX, it can be hard for an investor to decided which stock to invest in. For an investor or a professional fund manager, it is crucial to have a broader view of the stock market. Sector view can be adopted for conducting top-down analysis, followed by the industry and sub-industry analysis.
The companies listed on the ASX are categorised by employing the Global Industry Classification Standards (GICS), which creates the categories on the basis of their primary business activity. The Australian market is categorised into 11 sectors which have 24 industry groups. This sectoral division allows accurate comparison of the Australian market with foreign market.
The past performance of the sectors is relevant in understanding the performance of the sectors during the pandemic.
In this backdrop, here are the top performing sectors of 2021 till now.
Top performing ASX sectors of 2021
To assess the performance of the ASX sectors, S&P/ASX 200 sector - based data is utilised.
Source: Refinitiv, ASX, 15 July 2021
Information Technology sector
From January 2021 to date, XIJ (S&P/ASX 200 Information Technology) is down by 2.26% and year-to-date return is up by 42%. This sector involves the companies which are engaged in providing software services, equipment and hardware industry and semiconductor equipment industries. Software services include data processing, application, internet services, consulting, and system software. The equipment and hardware industry comprises manufacturing and retail companies that deal with electronic equipment. The manufacturers and suppliers of semiconductor equipment are part of the semiconductor industry.
With the ongoing lockdown, the prospect of the Information Technology sector seems bullish.
Afterpay Limited (ASX: APT) with a market cap of 30.98 billion, Xero Limited (ASX: XRO) with a market cap of 20.40 billion and WiseTech Global Limited (ASX: WTC) with a market cap of 9.81 billion are few top performing information technology companies.
Consumer Discretionary sector
From January 2021 to date, XDJ (S&P/ASX 200 Consumer Discretionary) is up by 14.40% and year-to-date return is up by 37%. The sector is booming and performing well because of an increase in the consumer’s confidence, ultra-low interest raw, the boom in the Aussie economy and recovering housing market. Moreover, the support extended by the government during COVID-19 and reduction in the spending in the travelling added to the growth of the consumer discretionary sector.
Wesfarmers Limited (ASX: WES) with a market capitalisation of 66.70 billion, Aristocrat Leisure (ASX: ALL) with a market capitalisation of 26.78 billion and Tabcorp Holdings (ASX: TAH) with a market capitalisation of 10.77 billion are top performing Consumer discretionary listed companies.
From January 2021 to date, XXJ (S&P/ASX 200 Financial-x-Property Trusts) is up by 16.73% and year-to-date return is up by 37%. The financial sector includes the companies which deal in the capital markets (financial services, mortgage REITs, consumer finance and asset management), providing insurance across properties, health, life, multi-line, reinsurance and proving banking services (diversified and regional banks).
Commonwealth Bank (ASX: CBA) with a market cap of 175.24 billion, Westpac banking group (ASX: WBC) with a market cap of 92.70 billion and National Australia Bank (ASX: NAB) with a market cap of 86.63 billion are the top performing stocks of the financial sector.
Most of the banks in the financial sector are considered as blue-chip stocks with a good dividend payout history
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From January 2021 to date, XXJ (S&P/ASX 200 Materials) is up by 5.018% and year-to-date return is up by 37%. metal and mining companies, chemical companies, construction material companies, packaging industry and forest product industries are included in the material sector.
The industry is witnessing a boom in prices due to uncreased demand and dearth of supply of various commodities including copper, iron-ore and gold.
BHP Group Limited (ASX: BHP) with a market cap of 150.12 billion, Fortescue Metal Groups (ASX: FMG) with a market cap of 77.58 billion and Rio Tinto (ASX: RIO) with a market cap of 47.61 billion are the largest material companies trading on ASX.
Health care sector
From January 2021 to date, XHJ (S&P/ASX 200 Health Care) is up by 2.99% and year-to-date return is up by 6.5%. The health care sector includes companies whose primary activities involves providing services to the health care providers and manufacturing/supply of biotechnology, pharmaceutical and life science related products.
CSL Limited (ASX: CSL) with a market cap of 127.35 billion, Sonic Healthcare Limited (ASX: SHL) with a market cap of 18.56 billion and Fisher & Paykel Healthcare (ASX: FPH) with a market cap of 16.54 billion are the top performing stocks of the Health care sector.
Health care sector stocks have shown positive return for consecutive five years and is one of the leading ASX sectors.