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Tuesday, September 16, 2008

OzRant: Dude, Where's the Bottom?

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

Well, we had the inevitable follow-on from the US markets - and yet after the nuffies all jumped off the morning cliff, the day had a flat to upwards bias. Hope springs eternal, it seems: today's session looks an awful lot like that of June 14th 2006 (when the All Ords had an early intraday low of 4726 but closed at 4815) and less like Feb 20th of that same year (mid-session low of 4748.5 and a close at 4788-and-change).

Still, the point is that folks are getting their panties in a wad when the market has only given back two years of gains (excluding dividends: obviously if you had reinvested dividends the results would have been worse). As such, the credit crunch has produced slightly worse results for stock investors than it has for home-'owners' (the folks whose houses are 95% owned by the bank), but neither have yet felt the full weight of what is coming. I wrote a piece many years ago that pointed out that the ten year expected return on equities - unadjusted for inflation - was negative when the aggregate trailing PE was above 20. Eight years to go. 

So if you think it's bad now, imagine if the Ords was at pre-2000 levels: and then think about those who bought off-plan using 100% mortgage and then withdrew the imaginary equity as other nuffnuffs pile in... because using a return to mean yield calculation without assuming a rise in the required risk premium on housing investment, house prices will eventually come to rest at somewhere near 1998 levels. Every 1% increase in the risk premium takes us back a couple more years. And that risk premium will certainly rise - I don't think anybody will be saying "nothing's safer than bricks and mortar" for another generation (at least, not without being laughed out of the room).

Major Market Indices

The broad market - the All Ordinaries (XAO) - dipped reasonably hard, registering a loss of 75.2 points (1.54%), finishing at 4799.8 points. The index hit an intraday high of 4875 at 10:00 am (i.e., while the ASX's antiquated computer system was still showing yesterday's close), and the low for the day was 4739.3 - set at 10:10 am Sydney time. From there, the entire session was further evidence that we are not yet at a low - almost every hour there was an attempt to rally, which indicates excessive bullish sentiment. Excessive bullish sentiment means lower prices ahead.

We did, however, get a volume spike and breadth was awful (4:1 against the gainers, almost). In the ordinary course of events this volume and breadth data would provide a modicum of support for a contrarian bet on a bounce - but this is not what I would call the ordinary course of events. 

Total volume traded on the ASX was 1.74bn units, 46.1% above its 10-day average. The ASX's daily listing of all stocks included 1366 different 3-letter FPO's which traded (i.e., had non-zero trade volume). Of these, 228 issues rose, with volume in rising issues totalling 332m units; decliners numbered 908, and between them they traded aggregate declining volume of 1.22bn shares.

Of the 491 All Ordinaries components, 89 rose while 350 fell. Volume was tilted in favour of the losers by a margin of 3.2:1, with 295.91m shares traded in gainers while 958.51m 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) - registered a loss of 66.9 points (1.39%), closing out the session at 4750.8 points.

GT Intraday Chart
Name Close +/-(%)
All Ordinaries 4799.80 -75.20 (1.5%)
ASX 20 2708.30 -21.30 (0.8%)
ASX 50 4662.60 -50.10 (1.1%)
ASX 100 3859.40 -51.50 (1.3%)
ASX 200 4750.80 -66.90 (1.4%)
ASX 300 4741.50 -68.60 (1.4%)
ASX Mid-Cap 50 4723.50 -138.60 (2.9%)
ASX Small Ordinaries 2632.00 -66.00 (2.4%)

The "heavy hitters" of the Australian market - the ASX 20 Leaders (XTL) - slid modestly, falling 21.3 points (0.78%), closing out the session at 2708.3 points. The 20 stocks which make up the index traded a total of 239.35m units; 8 index components rose, with rising volume amounting to 72m shares, while the 12 decliners had volume traded totalling 167.35m units. The major percentage gainers within the index were

  • Stockland (SGP), +$0.07 (1.35%) to $5.26 on volume of 12.4 million shares;
  • Foster's Group (FGL), +$0.07 (1.21%) to $5.85 on volume of 11.6 million shares;
  • QBE Insurance Group (QBE), +$0.23 (1%) to $23.23 on volume of 4.5 million shares;
  • BHP Billiton (BHP), +$0.35 (0.97%) to $36.40 on volume of 19.6 million shares; and
  • Woolworths (WOW), +$0.14 (0.5%) to $28.27 on volume of 3.4 million shares.

On the less salubrious side of the big-cap fence, the following stocks were the worst-performed within the index:

  • Macquarie Group (MQG), -$2.66 (6.74%) to $36.80 on volume of 5.4 million shares;
  • AMP (AMP), -$0.3 (4.39%) to $6.53 on volume of 15.9 million shares;
  • National Australia Bank (NAB), -$0.92 (4.03%) to $21.90 on volume of 12.6 million shares;
  • Suncorp-Metway (SUN), -$0.35 (3.68%) to $9.15 on volume of 8 million shares; and
  • Woodside Petroleum (WPL), -$1.64 (3.15%) to $50.36 on volume of 3 million shares.

The ASX Small Ordinaries (XSO) was taken to the woodshed somewhat, sliding 66 points (2.45%), closing out the session at 2632 points.

Among the stocks that make up the Small Caps index, 38 index components finished to the upside, and of the rest, 139 closed lower for the session.

The 194 stocks which make up the index traded a total of 429.62m units: volume in the 38 gainers totalling 162.94m shares, with trade totalling 251.21m units in the index's 139 declining components. The major percentage gainers within the index were
  • Centro Properties Group (CNP), +$0.02 (22.22%) to $0.09 on volume of 50.7 million shares;
  • Centro Retail (CER), +$0.01 (10%) to $0.11 on volume of 22.3 million shares;
  • Rubicon America Trust (RAT), +$0.00 (7.14%) to $0.05 on volume of 1.4 million shares;
  • Kingsgate Consolidated (KCN), +$0.22 (5.14%) to $4.50 on volume of 370 thousand shares; and
  • Citigold Corporation (CTO), +$0.01 (4.65%) to $0.23 on volume of 1.3 million shares.

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

  • Bannerman Resources (BMN), -$0.18 (25.93%) to $0.50 on volume of 5.2 million shares;
  • Allco Finance Group (AFG), -$0.04 (19.44%) to $0.15 on volume of 4.9 million shares;
  • Jabiru Metals (JML), -$0.05 (16.67%) to $0.25 on volume of 2.6 million shares;
  • Admiralty Resources NL (ADY), -$0.02 (15%) to $0.09 on volume of 32.3 million shares; and
  • Murchison Metals Ltd (MMX), -$0.25 (14.67%) to $1.43 on volume of 3.8 million shares.

Index Changes
Code Name Close +/- % Volume
XAO All Ordinaries 4799.8 -75.2 -1.54 1298.3m
XFL ASX 50 4662.6 -50.1 -1.06 524.9m
XJO ASX 200 4750.8 -66.9 -1.39 1131m
XKO ASX 300 4741.5 -68.6 -1.43 1237.7m
XMD ASX Mid-Cap 50 4723.5 -138.6 -2.85 283.2m
XSO ASX Small Ordinaries 2632 -66 -2.45 429.6m
XTL ASX 20 2708.3 -21.3 -0.78 239.4m
XTO ASX 100 3859.4 -51.5 -1.32 808.1m
Market Breadth
ASX20 XTO XJO XAO XSO Market
Advances 8 23 46 89 38 228
Declines 12 75 147 350 139 908
Advancing Volume 72m 126.5m 277.3m 295.9m 162.9m 332m
Declining Volume 167.3m 663.5m 826.5m 958.5m 251.2m 1.22bn
GICS Industry Indices

Among the 11 industry indices, 2 registered an advance for the session, the remaining 9 lost ground.

The best performing index was Healthcare (XHJ), which added 25.3 points (0.27%) to 9457.1 points. The 8 stocks which make up the index traded a total of 12.87m units; 6 index components rose, with rising volume amounting to 10.65m shares, while the 2 decliners had volume traded totalling 2.21m units. The major percentage gainers within the index were

  • Sigma Pharmaceuticals Ltd (SIP), +$0.04 (2.69%) to $1.34 on volume of 3.1 million shares;
  • Cochlear (COH), +$1.48 (2.62%) to $58.00 on volume of 355.4 thousand shares;
  • ResMed Inc. (RMD), +$0.13 (2.27%) to $5.85 on volume of 3.5 million shares;
  • Healthscope (HSP), +$0.09 (2.09%) to $4.40 on volume of 509.5 thousand shares; and
  • Ansell (ANN), +$0.22 (1.83%) to $12.24 on volume of 1.1 million shares.

Second in the index leadership stakes was Consumer Staples (XSJ), which gained 5.5 points (0.08%) to 7293 points. The 12 stocks which make up the index traded a total of 40.28m units; 5 index components rose, with rising volume amounting to 21.22m shares, while the 7 decliners had volume traded totalling 19.06m units. The major percentage gainers within the index were

  • Futuris Corporation (FCL), +$0.06 (4.26%) to $1.47 on volume of 2.7 million shares;
  • ABB Grain (ABB), +$0.22 (2.63%) to $8.59 on volume of 558.3 thousand shares;
  • Foster's Group (FGL), +$0.07 (1.21%) to $5.85 on volume of 11.6 million shares;
  • Woolworths (WOW), +$0.14 (0.5%) to $28.27 on volume of 3.4 million shares; and
  • Coca-Cola Amatil (CCL), +$0.03 (0.33%) to $9.05 on volume of 2.9 million shares.

The worst-performed index for the session was Utilities (XUJ), which dipped 182.6 points (3.74%) to 4698 points. The 10 stocks which make up the index traded a total of 92.97m units; The 9 decliners had volume traded totalling 68.34m units, and volume in the lone rising index component was 24.63m shares, The major percentage decliners within the index were

  • Babcock & Brown Infrastructure Group (BBI), -$0.05 (14.06%) to $0.28 on volume of 42.2 million shares;
  • Babcock & Brown Wind Partners Group (BBW), -$0.07 (7.33%) to $0.89 on volume of 13.5 million shares;
  • Duet Group (DUE), -$0.14 (4.76%) to $2.80 on volume of 4 million shares;
  • AGL Energy (AGK), -$0.46 (3.18%) to $13.99 on volume of 1.4 million shares; and
  • Spark Infrastructure Group (SKI), -$0.05 (3.05%) to $1.59 on volume of 1.8 million shares.

Just missing out on the wooden spoon was Energy (XEJ), which slid 608 points (3.62%) to 16179.2 points. The 17 stocks which make up the index traded a total of 64.01m units; The 15 decliners had volume traded totalling 58.97m units, and volume in the lone rising index component was 1.02m shares, The major percentage decliners within the index were

  • Paladin Energy (PDN), -$0.42 (8.94%) to $4.28 on volume of 8.3 million shares;
  • Queensland Gas Company (QGC), -$0.31 (6.87%) to $4.20 on volume of 4.5 million shares;
  • Riversdale Mining (RIV), -$0.55 (6.67%) to $7.70 on volume of 2.8 million shares;
  • Santos (STO), -$1.06 (5.64%) to $17.74 on volume of 3.5 million shares; and
  • Oil Search (OSH), -$0.32 (5.38%) to $5.63 on volume of 5.3 million shares.

Third-to-last amongst the sector indices was Industrials (XNJ), which slid 115 points (2.44%) to 4599.2 points. The 32 stocks which make up the index traded a total of 136.63m units; The 24 decliners had volume traded totalling 113.7m units, and 7 index components rose, with rising volume amounting to 22.3m shares, The major percentage decliners within the index were

  • Asciano Group (AIO), -$0.73 (18.07%) to $3.31 on volume of 10.3 million shares;
  • Alesco Corporation (ALS), -$1.01 (14.62%) to $5.90 on volume of 1.1 million shares;
  • Macquarie Airports (MAP), -$0.25 (8.68%) to $2.63 on volume of 13.8 million shares;
  • Australian Infrastructure Fund (AIX), -$0.17 (6.23%) to $2.56 on volume of 1.4 million shares; and
  • Monadelphous Group (MND), -$0.98 (6.17%) to $14.91 on volume of 193.7 thousand shares.

Sector Indices
Code GICS Sector Close +/- % Volume
XHJ Healthcare 9457.1 25.3 0.27 13m
XSJ Consumer Staples 7293 5.5 0.08 40m
XMJ Materials 12118.4 -43.5 -0.36 218m
XDJ Consumer Discretionary 1681 -19.7 -1.16 60m
XIJ Information Technology 505.5 -7.3 -1.42 3m
XPJ Property Trusts 1399.6 -22.7 -1.6 252m
XXJ Financials ex Property Trusts 4727.9 -88.2 -1.83 183m
XTJ Telecommunications 1416.6 -28.6 -1.98 75m
XNJ Industrials 4599.2 -115 -2.44 137m
XEJ Energy 16179.2 -608 -3.62 64m
XUJ Utilities 4698 -182.6 -3.74 93m

All Ordinaries Major Movers

All Ords Volume Leaders
Code Name Close +/- % Volume
TLS Telstra Corporation Limited. 4.17 -0.08 -1.88 55.8m
CNP Centro Properties Group 0.09 0.02 22.22 50.7m
BBI Babcock & Brown Infrastructure Group 0.28 -0.05 -14.06 42.2m
GPT GPT Group 1.70 -0.10 -5.56 38.4m
OZL OZ Minerals Limited 1.41 -0.04 -2.77 36.2m
All Ords Percentage Gainers
Code Name Close +/- % Volume
CNP Centro Properties Group 0.09 0.02 22.22 50.7m
CEG CEC Group Limited 0.13 0.02 18.18 91.8k
GNM Gujarat NRE Minerals Ltd 1.20 0.15 14.29 33.1k
CER Centro Retail 0.11 0.01 10 22.3m
RAT Rubicon America Trust 0.05 0.00 7.14 1.4m
All Ords Percentage Losers
Code Name Close +/- % Volume
BNB Babcock & Brown Limited 1.05 -0.53 -33.54 32.9m
BMN Bannerman Resources Limited 0.50 -0.18 -25.93 5.2m
AFG Allco Finance Group Limited 0.15 -0.04 -19.44 4.9m
AIO Asciano Group 3.31 -0.73 -18.07 10.3m
JML Jabiru Metals Limited 0.25 -0.05 -16.67 2.6m