Equity markets around the world have slumped on worries that problems stemming from Europe, where countries including Greece, Italy and Ireland have had problems repaying debt, will cause credit markets around the world to freeze up.
The S&P/ASX200 index ended 2010 at 4745. The benchmark has not posted a back-to-back annual loss since it was created. The previous benchmark, the All Ordinaries index, recorded back-to-back declines in 1981 and 1982 during a deep recession.
Shayne Heffernan in a note to traders today said that the Safe havens that have attracted investment in 2011 are a mis-step by investors that will correct in 2012.
Surprisingly, the battered Australian discretionary retail sector was not the worst performer of 2011.
Mining sector the biggest loser
The biggest loser was the materials sector with a 25.5 per cent slide over the year as commodities prices receded from their peaks.
Steelmakers, faced with rising costs and sliding demand, had massive declines, with BlueScope Steel off 78.7 per cent and smaller rival OneSteel down 73 per cent over the course of the year.
One of the stand-outs for the year is the world's biggest mineral sands company Iluka Resources, which makes zircon and titanium, up 70 per cent as prices for its products surged.
The top banks helped minimise the losses in the financial sector index to 10.4 per cent for the year.
In 2012, efforts by China to put the brakes on growth could spell a recovery for materials and mining companies, but the heavy debt burden in Europe remains the major risk for global markets, analysts said.
Among defensive stocks, Telstra posted a gain of 19.4 per cent for this year as investors sought high-yielding companies. Telstra shares were off 0.3 per cent today.
Horrible year for retailers
Retailers had a horrible 2011, with a 21.9 per cent sector decline as consumers saved more and bought less in store and more online.
Surfwear label Billabong slid 78 per cent and electrical and furniture store Harvey Norman lost 38 per cent of its value this year.
Retailers today were mixed following warnings of disappointing Christmas sales. Department store chain Myer was flat at $1.935, just above a record low of $1.92. Electronics retailer JB Hi-Fi was up 0.8 per cent.
The market showed little reaction to data showing China's factory activity likely shrank again December as demand at home and abroad slackened, according to a purchasing managers' survey showed.
Focus to remain on Europe
The hype surrounding Europe is set to continue for sometime but that does not mean there is not value in the Miners Shayne Heffernan said today.
In New York overnight, the Dow Jones Industrial Average advanced 1.1 per cent, the S&P 500 rose 1.1 per cent on the back of some encouraging economic data.
In other overseas news, the much anticipated debt auction in Italy produced mixed results. The auction raised seven billion euros ($9 billion), less than had been targeted because of weak demand, but the interest rate paid came in below the danger threshold of 7 per cent.
Shayne Heffernan oversees the management of funds for institutions and high net worth individuals.
Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services. www.livetradingnews.com