Interdum stultus opportuna loquitur...

Monday, January 07, 2008

OzRant: Open Up and Say AAAAaargh!!

Note - from June 24th 2009, this blog has migrated from Blogger to a self-hosted version. Click here to go straight there.

Well, the weekend has come and gone, and I am only very slightly closer to having the new USRant finished. I have managed to cough up about eight kilos of thick green snot, courtesy of a chest infection I got while in a French detention centre in November... just when I think that the damn thing is licked, it rears its head again.

Either that, or I am allergic to something - and I am trying like blazes to avoid taking antibiotics to 'clear it up' (i.e., to help the underling bacteria to develop new and treatment-resistant strains). 

I look forward to the day when we can all be converted to a bitstream and shuffle off these stupid meatbags that we use for transport. Although I am rather fond of my projection into 'meatspace' (and the chicks can't get enough of me... they think they can, but they're kidding themselves), it seems to me that our meatbags are really rather a shit design: prone to decomposition, decay and other things that start with 'de' that are, on the whole, unpleasant. If I had set about creating Man in my own image, I would have given him a carbon fibre chassis and some racing stripes... and less on the snot-producing side of the ledger.

However I have done some other stuff to make the RantCharts (the little link boxes over in the right column) a bit sexier - for the moment I've only put the new sexiness in the Stocks chart thingo (which produces a fairly rudimentary chart in its 'free' version). Today I will port the new logic across to the other charting sections.

What can one say about the state of the markets? Well, apart from gloating at the inability of the world's political classes to continue their shell game, not a lot. The current decline is overdue, and is nowhere near overdone. For markets to return to a situation where they contain anything other than speculative merit, they would have to fall another 40% overall.

That is not to say that there are not good stocks about - but when major stocks have dividend yields which are lower than the B-rated debt of the same company, then you know that the stock is still massively overvalued (I'm looking at you, News Corpse - but it applies to others as well).

I mentioned this for the first time in 2000 - that since bonds have a senior claim over cash flow than stocks do, their inherent risk is a fortiori lower than stocks. As such, stocks ought to have higher expected returns - by which I do not mean a higher probability of finding a bigger idiot than you. If you consider that at some point stocks must fall into like with a sensible valuation (as in discounted cash flows) then you can understand that a situation in which a senior debt trades at a discount to its underlying stock, is absurd.

Speaking of News Corpse, what a coincidence that News Corpse's stock has tanked pretty badly following their Soviet-style exclusion of Ron Paul from the New Hampshire candidate's debate (yeah). Faux Noise (owned by News Corpse) initially claimed that it excluded Paul because he didn't poll in the double digits... but then he did (in the Iowa caucuses)... at which point they changed their story to something I have not even bothered to read. Funnily enough, the backlash amongst Paul supporters reached all the way to the state Republican party machine in New Hampshire, which declared it was no longer prepared to sponsor the debate on Faux. 

As I mentioned at the time, if News Corpse stock got downward momentum, then every leveraged punter in the world would jump on its neck. Given that fair value for the stock (basis NWS) is about $5, it's still got massive potential downside.

Citibank stopped people from withdrawing their full whack from its ATMs recently... explaining that some ATMs had been hacked. 

Yeah, right... why only Citi? I smell a corpse in their accounts, and a need to retain cash to keep within regulatory guidelines.

Major Market Indices

The broad market - the All Ordinaries (XAO) - had its worst day in quite a while, posting a loss of 145 points (2.27%), finishing at 6240.4 points. The intraday high of 6356.2 was at 10:00 am (i.e., when 90% of stocks were not open, and therefore not contributing - negatively - to the index). The Strayan market got the pain over with quickly (like ripping off a sticking plaster), with the low for the day set just under 90 minutes into the session (the low was 6229 - set at 11:25 am). After a feeble attempt to rally of the low, the market thought better of it and bumped along the bottom for the rest of the session.

Total volume traded on the ASX was 1.51 billion units, 8% above the market's 10-day average. The ASX's daily listing of all stocks included 1401 different 3-letter FPO's which traded (i.e., had non-zero trade volume). Of these, 240 issues rose, with volume in rising issues totalling 506.2 million units. Advancing issues were swamped almost 4:1 by the 932 stocks that fell: the advance-decline volume stats were not as bad, since aggregate declining volume traded was 938.9 million shares (less than twice the amount of advancing volume). But that volume tilt must have been the result of stocks outside the All Ords, because within the All Ords the volume tilts were much worse.

Of the 480 All Ordinaries components, just 49 rose while 391 fell. Volume was tilted in favour of the losers by a margin of 25.7:1, with 22.86 million shares traded in gainers while 586.5 million shares traded in the day's losers.

The Index that forms the cash basis for the SFE's Share Price Index Futures - the S&P/ASX 200 (XJO) - got a kicking which was exactly in line with the ALL Ords: the XJO shed 145.2 points (2.3%), closing out the session at 6161.6 points.

The "heavy hitters" of the Australian market - the ASX 20 Leaders (XTL) - were taken to the woodshed somewhat, sliding 71 points (2.05%), closing out the session at 3395.4 points. The internals of the index were utterly dismal: not a single stock registered a gain for the session. The 21 stocks which make up the index traded a total of 103.12 million units; all of it to the downside.

The following stocks were the worst-performed within the index:

  • Stockland (SGP), -$0.3 (3.59%) to $8.05 on volume of 4.5 million shares;
  • CSL Limited (CSL), -$0.99 (2.79%) to $34.50 on volume of 960.7 thousand shares;
  • National Australia Bank Limited (NAB), -$1 (2.68%) to $36.33 on volume of 4.5 million shares;
  • Westfield Group (WDC), -$0.51 (2.57%) to $19.30 on volume of 12.1 million shares; and
  • AMP Limited (AMP), -$0.25 (2.53%) to $9.64 on volume of 2.8 million shares.

At the shallow end of the market-cap pool, lie the denizens of the ASX Small Ordinaries (XSO) still found it impossible to get their heads above water. The small end of the market fell a teensy bit harder than its large-cap counterpart, sliding 91.3 points (2.37%) to finish a horrible session at 3753.7 points.

Among the stocks that make up the Small Caps index, 17 index components finished to the upside, and of the rest, 168 closed lower for the session.

The 193 stocks which make up the index traded a total of 144.47 million units: volume in the 17 gainers totalling 14.18 million shares, with trade totalling 127.92 million units in the index's 168 declining components. The major percentage gainers within the index were
  • Lynas Corporation Limited (LYC), +$0.08 (7.21%) to $1.19 on volume of 7.1 million shares;
  • Super Cheap Auto Group Limited (SUL), +$0.14 (3.27%) to $4.42 on volume of 25.5 thousand shares;
  • Platinum Australia Limited (PLA), +$0.08 (3.1%) to $2.66 on volume of 583.1 thousand shares;
  • Customers Limited (CUS), +$0.01 (3.03%) to $0.17 on volume of 208.5 thousand shares; and
  • Resolute Mining Limited (RSG), +$0.06 (2.93%) to $1.93 on volume of 652.6 thousand shares.

In the red-zone of the little-stock index, the following list represents the biggest downers (in terms of percentage decline):

  • Independence Group NL (IGO), -$0.87 (9.68%) to $8.12 on volume of 460.3 thousand shares;
  • Housewares International Limited (HWI), -$0.19 (8.56%) to $2.03 on volume of 13.4 thousand shares;
  • Challenger Diversified Property Group (CDI), -$0.08 (7.58%) to $0.92 on volume of 362.2 thousand shares;
  • Commander Communications Limited (CDR), -$0.02 (7.55%) to $0.25 on volume of 2.1 million shares; and
  • Reckson New York Property Trust (RNY), -$0.05 (7.35%) to $0.63 on volume of 22.1 thousand shares.

Index Changes
Code Name Close +/- % Volume
XAO All Ordinaries 6240.4 -145 -2.27 615.3m
XTL ASX 20 3395.4 -71 -2.05 103.1m
XFL ASX 50 5972.3 -129.2 -2.12 254.8m
XTO ASX 100 4979.1 -116 -2.28 423.9m
XJO ASX 200 6161.6 -145.2 -2.3 523.2m
XKO ASX 300 6178.9 -144.7 -2.29 568.4m
XMD ASX Mid-Cap 50 6357.7 -206.3 -3.14 169.1m
XSO ASX Small Ordinaries 3753.7 -91.3 -2.37 144.5m
Market Breadth
Advances 0 2 2 49 17 240
Declines 21 98 99 391 168 932
Advancing Volume 0m 5.1m 5.1m 22.9m 14.2m 506.2 million
Declining Volume 103.1m 418.8m 420.1m 586.5m 127.9m 938.9 million
GICS Industry Indices

Among the 11 industry indices, the news was universally negative: not a single sector managed to break into the "Win" column.

Since none of the industry sectors registered a gain for the session, there is no point in burdening ourselves with the internal behaviour of advancing sectors... on to the losers.

The worst-performed index for the session was Information Technology (XIJ), which dipped 19 points (3.35%) to 548 points. There are only 2 stocks in the index, which has been going silly recently based on the acquisition of a large stake in IRESS by the Commonwealth Bank. But even that was not enough to help today - both stocks fell, volume traded totalling 1.1 million units.

  • Computershare Limited (CPU), -$0.29 (2.99%) to $9.40 on volume of 825.8 thousand shares; and
  • Iress Market Technology Limited (IRE), -$0.23 (2.88%) to $7.77 on volume of 271.7 thousand shares.

Just missing out on the wooden spoon was Property Trusts (XPJ), which slid 66.9 points (3.27%) to 1976.2 points. The 20 stocks which make up the index traded a total of 181.24 million units; there was not a single index component that wasspared from the carnage, Centro - which had been touted as being able to withstand recent bad publicity - capitulated in a fairly newsworthy way, but it had some company...

  • Centro Properties Group (CNP), -$0.09 (7%) to $1.20 on volume of 63.9 million shares;
  • DB RREEF Trust (DRT), -$0.12 (5.99%) to $1.81 on volume of 12.8 million shares;
  • Valad Property Group (VPG), -$0.07 (5.22%) to $1.18 on volume of 11.8 million shares;
  • Centro Retail (CER), -$0.05 (5.1%) to $0.93 on volume of 14.4 million shares; and
  • APN/UKA European Retail Property Group (AEZ), -$0.04 (4.17%) to $0.92 on volume of 2.4 million shares.

Third-to-last amongst the sector indices was Materials (XMJ), which slid 390.4 points (2.56%) to 14873.9 points. The 43 stocks which make up the index traded a total of 78.73 million units; this is the first of the major declining indices that actually had a rising index component. The 41 decliners had volume traded totalling 71.62 million units, and volume in the lone rising index component was 7.11 million shares, The major percentage decliners within the index were

  • Independence Group NL (IGO), -$0.87 (9.68%) to $8.12 on volume of 460.3 thousand shares;
  • Zinifex Limited (ZFX), -$0.82 (6.73%) to $11.36 on volume of 6.3 million shares;
  • Mount Gibson Iron (MGX), -$0.17 (6.09%) to $2.62 on volume of 1.8 million shares;
  • Pan Australian Resources Limited (PNA), -$0.06 (5.74%) to $0.99 on volume of 2.8 million shares; and
  • Compass Resources NL (CMR), -$0.16 (5.52%) to $2.74 on volume of 687.7 thousand shares.

Sector Indices
Code GICS Sector Close +/- % Volume
XTJ Telecommunications 1647.9 -21.6 -1.29 47m
XSJ Consumer Staples 8749.6 -126.8 -1.43 15m
XUJ Utilities 6442.7 -130.9 -1.99 9m
XHJ Healthcare 9292.9 -193.5 -2.04 8m
XNJ Industrials 6328.6 -137.7 -2.13 50m
XXJ ASX200 Financials ex Property Trusts 6882.2 -157.9 -2.24 46m
XDJ Consumer Discretionary 2617.8 -59.9 -2.24 62m
XEJ Energy 15571.8 -408.2 -2.55 24m
XMJ Materials 14873.9 -390.4 -2.56 79m
XPJ Property Trusts 1976.2 -66.9 -3.27 181m
XIJ Information Technology 548 -19 -3.35 1m

All Ordinaries Major Movers

All Ords Volume Leaders
Code Name Close +/- % Volume
CNP Centro Properties Group 1.20 -0.09 -7 63.9m
CMJ Consolidated Media Holdings Limited 4.16 -0.13 -3.03 31.9m
TLS Telstra Corporation Limited. 4.63 -0.06 -1.28 24.2m
TLSCA Telstra (Installment Receipts) 3.09 -0.06 -1.9 18.2m
CER Centro Retail 0.93 -0.05 -5.1 14.4m
All Ords Percentage Gainers
Code Name Close +/- % Volume
SHV Select Harvests Limited 8.48 0.64 8.16 14k
LYC Lynas Corporation Limited 1.19 0.08 7.21 7.1m
PRT Prime Media Group Limited 3.78 0.23 6.48 0.2k
CFU Ceramic Fuel Cells Limited 0.59 0.04 6.36 59.3k
RKN Reckon Limited 1.62 0.08 4.87 125.2k
All Ords Percentage Losers
Code Name Close +/- % Volume
PFG Prime Financial Group Limited 0.65 -0.08 -10.96 24.4k
IGO Independence Group NL 8.12 -0.87 -9.68 460.3k
BDG Bendigo Mining Limited 0.38 -0.04 -9.52 3.4m
HWI Housewares International Limited 2.03 -0.19 -8.56 13.4k
MMN Macmin Silver Ltd 0.22 -0.02 -8.51 536.8k