17
FEBRUARY 2015
ACT
BUSINESSNEWS
AUTHOR:
CHRISSLEIGHT
is
one of theworld’smost
internationally renowned
construction businesswriters,
with specialist expertise in
financial markets and stock
market analysis. He is editor
of KHL’smarket-leading
International Construction
and
is a regular contributor to
ACT’
s sister publication,
International Cranes
and Specialized
Transport
.
The heavy
equipment sector
closed down on
the year in 2015,
despite othermajor
indexes achieving
reasonable gains.
Chris Sleight
reports.
T
hismonth’s graph
is for the calendar
year 2015. It
illustrateswhat a poor year
the constructionmachinery
sector hadon the stock
market, with the
ACT
Heavy
Equipment Sector (HEI)
losing 6percent over the
course of the year, while
mainstream indicatorswere
up anywhere between 8
percent to almost 15percent.
Another point thismonth’s
graph illustrates is that the
year canbe split into two
distinct halves. In the first
sixmonths of 2014, the
ACT
HEI grewwith themajor
indicators, and at points
in the secondquarter, was
outperforming these by some
margin.
Markets turned
However, at about the half-
year pointmarkets turned as
economicnews from around
theworlddeflated investor
sentiment.
The
ACT
HEI and themajor
indicators diverged again in
the secondhalf of the year.
After the initial drop, the
broadmarketsmanaged to
recover.However, once again
the
ACT
HEI effectively kept
falling, withmany small
recoveries beingwipedout by
evenbig subsequent falls.
The latest chapter of this
came inmid-December
asmining equipment
manufacturer JoyGlobal
posted fourthquarter fiscal
results that pointed to
continuedweakness in the
globalminingmarket.
Bearish sentiment
This came asmany analysts
and investors becamemore
bearishon stocks related
tomining and energy,
includingCaterpillar,
which is the largest single
component of the
ACT
HEI. A further problem for
U.S.A.-based companies
is the strengtheningU.S.
dollar, whichwillmake their
productsmore expensive and/
or less profitable on export
markets.
ACT Heavy Equipment Index (HEI)
DOW
NASDAQ
S&P500
25%
20%
15%
10%
5%
0%
-5%
% change
52weeks to February 2015
As 2015 got underway, it
is fair to say that “weakness”
was a keyword as far as the
stocks in the
ACT
HEIwere
concerned.
Even the lowoil prices
– a good thing formany
companies and their costs
–was seen as aproblem for
some of these equipment
manufacturers.
It is feared cheapoil will
make othermore expensive
energy sources less viable –
fracked shale gas or oil from
tar sands, for example – and
thiswill impact equipment
sales to these industries.
Add to this the existing
weakness inmining, slow
economic growth inmany
emergingmarkets and a
European economy that
is at the best flat, and
the fall in share prices is
understandable.
But it is important to
remember thatmuchof this
is sentiment. Things could
changewithpositivenews
from anyof the areas currently
seen asweaknesses.
■
ACT’
s Heavy Equipment Index
(HEI) tracks the performance
of eight of America’smost
significant, publicly-traded
construction equipment
manufacturers – Astec
Industries, Caterpillar, CNH,
Deere & Company, Joy Global,
Manitowoc and Terex.
Weak ending
