The S&P/ASX 200 index was a strong performer in 2019, ending the year with a return of just over 20% excluding dividends.
The benchmark index achieved this despite a number of wobbles along the way.
Here are a few ASX lowlights for 2019 that caught my eye:
Scandals weigh on banks shares.
After a strong start to the year following a better than expected Royal Commission final report, a number of scandals in the banking sector ended up weighing heavily on the big four banks. The biggest lowlight was arguably AUSTRAC taking Westpac Banking Corp (ASX: WBC) to the Federal Court of Australia for civil penalty orders. These orders relate to systemic non-compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act. AUSTRAC alleges Westpac contravened the Act on over 23 million occasions. This led to the resignation of CEO Brian Hartzer.
Costa guidance downgrades.
The Costa Group Holdings Ltd (ASX: CGC) share price crashed lower in 2019 following a series of earnings guidance downgrades by the horticulture company. In addition to this, its falling profits put pressure on its balance sheet and debt covenants. This led to Costa launching a $187 million capital raising, which was undertaken at a significant discount to its share price at the time.
Cannabis shares run out of puff.
The Australian cannabis sector was out of form in 2019, leading to AusCann Group Holdings Ltd (ASX: AC8), Cann Group Ltd (ASX: CAN), and Creso Pharma Ltd (ASX: CPH) shares falling heavily. This was driven by a number of factors. These include increasing competition, lower than expected demand in North America, and an oversupply over cannabis dry flower. The limited revenues being generated also appears to have negatively impacted investors sentiment.
Lithium price collapse weighs on miners.
Another group of shares that disappointed investors in 2019 were the lithium miners. The likes of Galaxy Resources Limited (ASX: GXY), Orocobre Limited (ASX: ORE), and Pilbara Minerals Ltd (ASX: PLS) crashed lower after lithium prices sank lower once again. Growing supply and falling demand for the battery making ingredient weighed on prices. Unfortunately, many experts expect the tough times to continue in 2020.
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Motley Fool contributor James Mickleboro owns shares of Galaxy Resources Limited and Westpac Banking. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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