After six straight days of losses (most of them quite heavy), the S&P/ASX 200 (INDEXASX: XJO) looks to be on the cards for a positive day. ASX shares are up across the board and I'm sure many an investor is breathing a sigh of relief today.
So, I thought it would be useful to see how some of the ASX blue-chip shares that have a reputation for being 'safe' stocks to hold during tough times actually held up last week compared to the overall market.
With interest rates at record lows, many of these so-called safe shares have been in high demand over the last few years as investors seek income security.
How did the market perform last week?
Well, as we all know, it was a tough week for ASX shares. Between the start of the correction and yesterday, the ASX 200 Index went from approximately 7,190 points to 6,389 points – a drop of 11.14%.
For any ASX shares that you might have bought as 'protection' or because of a perception as 'defensive', you would hope that they would fall by less than the overall market.
First, let's take Woolworths Group Ltd (ASX: WOW) – the largest grocery/supermarket chain in Australia. Woolies shares were going for close to $44 a fortnight ago ($43.96 was the top). Yesterday, the Woolies share price closed at $38.63 and is asking $38.15 today – a 13.22% drop from its pre-correction high. That tells me that Woolies didn't really live up to its 'safe' reputation when push came to shove last week.
Coles Group Ltd (ASX: COL) didn't hold up too well either. Coles shares topped out at $17.25 earlier in the month but closed at $14.67 yesterday. That translates into a 14.96% slump peak to trough – once again below the broader market's performance.
But that's just supermarkets. Let's also take a look at toll-road king Transurban Group (ASX: TCL) and utility provider AGL Energy Ltd (ASX: AGL).
Transurban reached a new high of $16.44 just two weeks ago. But yesterday, Transurban shares were asking only $14.94 at market close. That's a drop of 9.12% – which was slightly better than the overall market.
Meanwhile, AGL was asking $21.13 just before the market correction. At market close yesterday, AGL shares were asking $18.85. That's a 10.79% turnaround – just above the performance of the broader market.
Foolish takeaway
As you can see from the numbers above, the 'safer' stocks in the market don't always live up to their reputations when the feet are in the fire.
Of course, if reliable dividends are your ultimate aim, the share prices don't matter too much. But I think it's a valuable lesson in the 'assumed knowledge' that sometimes abounds, which doesn't turn out to be too accurate when put to the test.
