17
JULY 2013
ACT
BUSINESS NEWS
AUTHOR:
CHRIS SLEIGHT
is one of
the world’s most internationally
renowned construction
business writers, with
specialist expertise in financial
markets and stock market
analysis. He is editor of KHL’s
market-leading
International
Construction
and is a regular
contributor to
ACT’
s
sister publication,
International Cranes
and Specialized
Transport
.
Stock markets
retained their
record highs
as the summer
progressed
but the heavy
equipment
industry left the
party early.
Chris
Sleight
reports.
T
he Dow remained
at historic highs
above 15,000 points
for most of June and on into
July. Although there were a
few wobbles as
ACT
went to
press, there was no sign of
the sort of significant fall that
might be expected as a result
of profit taking.
While the Dow has led
the way – it is up almost 30
percent from its position a
year ago – other American
market indicators have not
been far behind. Both the
NASDAQ and S&P 500 have
seen gains of the order of 25
percent over the last year.
The NASDAQ has been
particularly impressive over
the longer term. It is now
some 160 percent higher
than its low point during the
depths of the crisis in early
2009. In comparison, the Dow
is up about 125 percent and
the S&P 500 is up by a similar
margin.
Although the
ACT
HEI’s
long-term recovery has been
even more impressive – by
early June it was some 240
percent higher than its 2009
low – its recent performance
has been disappointing.
There have been some gains
over the last 12 months, but
the index for heavy equipment
manufacturers’ shares has
missed out on a lot of the
growth enjoyed by the major
benchmark indicators like the
Dow, S&P 500 and NASDAQ.
While these are up 25 to 30
percent compared to a year
ago, the
ACT
HEI’s gain is
only about 10 percent and the
last three months have been
particularly disappointing.
Different drivers
But this is not to say that
the companies which
make up the
ACT
HEI are
underperforming or failing in
any way, more that there are
different factors at play. The
ACT Heavy Equipment Index (HEI)
DOW
NASDAQ
S&P 500
30%
25%
20%
15%
10%
5%
0%
-5%
% change
52 weeks to June 2013
key reason that the Dow
et
al
have prospered is the lack
of other suitable safe haven
investments.
Interest rates and bond
yields are low, gold is falling
and so it is only really blue-
chip stocks that offer investors
a return at reasonably low
risk.
So in fact it could be argued
that the
ACT
HEI reflects a
more realistic picture of the
domestic and global economy.
Yes, there is growth out
there and the dark days of
the recession and potential
collapse of the Euro-zone are
behind us, but neither the
American or key developing
world economies are about to
shift up into another gear of
high growth, as was seen in
2003 to 2007.
The outlook is not bleak
by any means, and it should
continue to improve, but there
is no sign of another boom on
the horizon.
■
ACT’
s Heavy Equipment Index
(HEI) tracks the performance
of eight of America’s most
significant, publicly-traded
construction equipment
manufacturers – Astec
Industries, Caterpillar, CNH,
Deere & Company, Joy Global,
Manitowoc and Terex.
Equipment
sector subdued
