17
OCTOBER 2014
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
.
After a promising
rally the heavy
equipment sector
showed some frailty
over the summer.
Chris Sleight
reports.
F
ormost of this year
theheavy equipment
sector has beenon
a growthpath. Itmayhave
missedout on the broader
market rally in2013, but 2014
has seen shareprices in the
sector rise at about the same
rate as thewell-watchmarket
indicators like theDow, S&P
500 andNASDAQ.
This summer saw the
markets suffer somethingof
awobble, asBancoEspirito
Santo, amajor Portuguese
bank, needed a rescue in
Europe, while tensions rose
in theMiddleEast and the
relationshipbetweenRussia
and theWest souredover the
Ukraine.
All these concerns prompted
markets todiveduring July,
although therewas something
of a recovery towards the end
ofAugust. Interestingly,many
of the tensions that caused
thedownturn remained, and
themarkets recoveredon
the basis that investors had
becomemore comfortable
with them.
As thismonth’s graph
shows, theheavy equipment
manufacturing sector, as
measuredby the
ACT
Heavy
Equipment Index (HEI) took
a sharper plunge than the
broadmarket indicators, and
didnot recover aswell.
Whereas the likes of the
Dow, S&P500 andNASDAQ
lost atworst about 5percent
of their value, the
ACT
HEI
was down a good10percent,
and arguablymore like 13
percent, dependingonwhich
start point you chose.
Losing ground
And following thedip, the
major indicators had regained
their lost groundby early
September and somehad
movedpast their previous
highs.
ACT Heavy Equipment Index (HEI)
DOW
NASDAQ
S&P500
40%
35%
30%
25%
20%
15%
10%
5%
0%
-5%
-10%
% change
52weeks to September 2014
However, the
ACT
HEI
remained a good5percent
behind its peak earlier in the
summer.
Onewayof looking at it is
that the
ACT
HEI is doing
about half ofwhat it should
do as an indicator of cyclical
stocks. It is falling steeply
when themarkets are bad, but
it is failing tobounce back
anddemonstratemarket-
beating growthwhen things
take a turn for the better.
This demonstrates that
while there is confidence in
themarkets, there are still a
lot of jitters among investors
about the robustness of the
economic recovery.
Major geopolictical events
in theMiddleEast orwith
Russiawill always have an
impact, but in times ofmore
convincing economic growth
theywouldhave less of an
impact or be shrugged-off
faster.
■
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.
Market wobbles,
investors jittery
