First published in Cleantech magazine, March 2009. Copyright Cleantech Investor 2009
John O'Brien, Managing Director of Australian CleanTech, reviews the performance of the ACT Australian CleanTech Index and its constituents.
The ACT Australian CleanTech Index measures of the performance of cleantech stocks listed on Australian markets. It was launched in March 2008 and was the first index in Australia to monitor cleantech companies. Companies that qualify for inclusion have the majority of their revenue generated by an 'approved' cleantech activity. These activities include renewable energy, biofuels, energy efficiency, carbon trading, environmental services, waste and recycling, low emissions vehicle technologies, water technologies and biogas. The Index specifically excludes general agricultural stocks, nuclear, uranium, clean coal and lower emissions fossil fuels such as natural gas and coal bed methane.
Criteria for inclusion in the ACT Australian CleanTech Index focuses on companies whose output positively enhances the communities and ecologies in which they reside. It is about doing ‘more good’ rather than ‘less bad’.With over 75 companies included in the universe of the Index and with a combined market capitalisation of over A$8 billion (US$5.3 billion), the ACT Australian CleanTech Index presents a picture of the Australian cleantech industry’s growth in a single measure.
The Index is weighted by market capitalisation and is benchmarked against both the Standard & Poor’s ASX200 Index and the Standard & Poor’s ASX Small Ordinaries Index. The rules for the formulation and management of the Index have been developed with reference to global best practice.
The ACT Australian Cleantech Index outperformed its benchmarks through the bull market in the twelve months to June 2007 (42.9% gain) and then again through the bear market in the twelve months to June 2008 (16.0% loss).
However, its performance since June 2008 has been mixed. Until September 2008 the Index was outperforming its benchmarks, but by the end of October had plummeted below its comparators. Whilst the total market was falling heavily during this period, the ACT Australian Cleantech Index may have fared even worse due to the collapse in support for the small cap stocks that make up the majority of its constituents. The Index showed a strong recovery in December and a steady performance so far in 2009.
Sub-indices are tracked in the following sectors: solar, wind, biofuels, waste, geothermal and environmental services. A seventh sub-index covers a variety of the smaller sub-sectors such as energy efficiency, green buildings, energy storage and fuel cells.
The sub-indices provide guidance on some of the trends in the Australian market:
• The Solar Index is the best performer since June 2008 as a result of an encouraging regulatory environment;
• The Geothermal Index shows the significant gains that were made in that sector during 2006 and 2007, but that some of this overheating has now been removed;
• The Biofuels Index demonstrates the steady decline of the Australian biofuels industry since June 2006 due to increasing feedstock costs and reduced Government backed subsidies;
• The Waste Index is dominated by the Sims Metal Group and Transpacific Industries, both of which have been active consolidators of what had been a very fragmented sector. The Waste Index performed very well until the last few months, when falling commodity prices have caused significant losses. In particular Sims Metal Group’s acquisition of the US waste manager, Metal Management, in September 2007 has exacerbated its problems.
At its peak in July 2007, the total market capitalisation of the companies in the Index was A$16.3 billion (US$10.8 billion). At that time, there twenty companies with a market capitalisation of over A$100 million (US$66 million) and four companies with market capitalisations of over A$1.0 billion (US$660 million). At the end of January, these figures had reduced to nine and one respectively.
At its last rebalance on 31 December 2008, the five largest companies by market capitalisation in the Index are Sims Metal Group, Transpacific Industries, Babcock & Brown Wind Partners, an owner of operating and development wind farms, the Crane Group, a diversified supplier of water related equipment and Energy Developments, an international owner of landfill gas generating assets.
The next five largest stocks are Geodynamics, the world’s leading hot dry rock geothermal developer, Transfield Services Infrastructure Fund, an owner of wind and water assets, Coffey Environments, an environmental services company, Dyesol Ltd, one of the world’s leading developers of building integrated photovoltaics, and Quantum Energy, a leading vertically integrated domestic solar manufacturer and supplier.
The ACT Australian CleanTech Index is updated monthly and published on the Australian CleanTech website at www.auscleantech.com.au and in various publications focused on cleantech and ethical investing. It is rebalanced quarterly for both changes in shares on issue and changes in company activities. To receive a direct email with monthly performance statistics, contact Australian CleanTech on This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
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