Cleantech stocks bounce back from Covid, set scene for green recovery | RenewEconomy

Cleantech stocks bounce back from Covid, set scene for green recovery

Deloitte Australian CleanTech Index bounces back after shock from Covid-19 and rounds off seven years of significantly outperforming the ASX200.

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The Deloitte Australian CleanTech Index followed the wider Australian market and bounced back after the shock from the COVID-19 pandemic. The ASX200 grew by 16% this quarter, with the DACT20 Index closely behind, growing by 14.5%.

The FY20 annual performance of the DACT was a contraction of 5.8%, significantly outperforming the ASX200 loss of 10.9%. This brings the total to seven years in a row where the DACT has outperformed the wider market and demonstrates how the sector is maturing and growing. The five-year performance of the DACT still boasts a 53.4% gain, compared to 14.7% gain for the ASX200.

% Change  Last Quarter 12 Months 3 Years 5 Years
ASX200  16.2% (10.9%) 9.6% 14.7%
DACT Index  14.5% (5.8%) 11.8% 53.4%
DACT20  14.1% (3.6%) 18.2% 60.7%

The companies included in the Index include renewable energy, energy efficiency, resource efficiency, energy storage, battery minerals and water treatment. These are the industries that are redefining how cities work and our communities live so it is likely we will see these industries play a critical role in our economy’s post-COVID recovery.

The best and worst performers in terms of share price performance over the quarter are shown in the table below.

The Deloitte Australian CleanTech Index underwent its quarterly rebalancing at the end of June which took account of recent share issues and other corporate activity. Windlab was delisted during the quarter due to its acquisition and privatisation by Squadron Energy, and no companies were added to the index this quarter.

To provide an analysis of the DACT Index, a number of sub-indices have been developed. Over the quarter, all sub-indices performed well, boasting strong signs of recovery from the COVID-19 shock.

The Efficiency & Energy Storage sub-index was the strongest performing sub-index recording a 30.6% increase, with the Waste sub-index following close behind with a 26% increase. Despite the recovery this quarter, the year to date performance of the sub-indices still reflects the shocks from the previous quarter.

 % Change  Last Quarter 12 Months 3 Years 5 Years
Renewable Energy 12.1% (1.8%) 41.4% 91.2%
Water 2.4% (14.6%) (5.9%) 25.7%
Waste 26.0% (10.8%) 2.6% 47.7%
Sustainable Minerals 19.2% (33.2%) N/A N/A
Efficiency & Energy Storage 30.6% 6.1% 35.4% 96.9%

With 91 companies falling under the coverage of the Index, and with a combined market capitalisation of over $47.4 billion, the Deloitte Australian CleanTech Index presents the only complete picture of the Australian cleantech industry’s growth in a single measure.

The growth of the sector over the last five years has been incredibly strong, yet the COVID-19 outbreak disrupted the world’s markets. Restrictions to curb the spread of the virus and relieve the stress on health care systems were a demonstrated success in Australia, with new community transmitted infections dropping dramatically over the quarter.

With this success, restrictions are mostly being lifted, and we expect to see this reflected through the Australian market as the road to recovery begins. Although it was hit almost as hard as the total market, the cleantech sector is showing early signs of recovery that may be hinting a more rapid recovery in stock prices for the industries of the future over the next 3-6 months – setting the foundation for a green recovery for the entire economy.

The latest Quarterly Index Performance Report can be downloaded from here.

https://www2.deloitte.com/au/en/pages/energy-and-resources/articles/cleantech-index.html

The Deloitte Australian CleanTech  (DACT) Index is a quarterly review of cleantech stocks listed in Australia. It is compiled from publicly available information provided by the Australian Securities Exchange (ASX). The DACT Index is based on the market capitalisation weighted share price performance of listed companies that operate across a number of defined sub-sectors

John O’Brien is a partner and Lydia Brunton is an analyst at Deloitte Energy Transition & Decarbonisation

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