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It is difficult to write sensibly about the damage being done (or more correctly, about the previous damage which is now being exacerbated) by politicians, without sounding like a candidate for the looney bin. That said, the situation is pretty grim for anybody who is not getting indemnified for some-or-other whackery.
Paid over the odds for a house with no money down, and didn't really bother to inform yourself of the terms of the highest value contract of your life? Oh, you poor dear... here, let's have the frugal and the responsible pay the consequences.
Managed a bank and got your equityholders hip-deep in instruments which were palpably ridiculous? Poor lamb... tell you what, let's tax the living shit out of the population from here to eternity, in order that you don't have to deny your trophy wife the Botox that she thinks will stop you from drilling a 20 year old from the typing pool.
The whole circus was based on a false premise - that clever people doing sums could make risk vanish into thin (profit laden) air.
I wrote - back in 2004 - that this was stupid. That just because bank Boards (who by and large have middling bachelor's degrees, usually in law) got bamboozled by the algebra and were too proud to admit they didn't understand it, didn't mean that the risk ceased to exist.
Way way way back, when Dicko and I did some consulting for Westpac (for their Credit Policy and Control department), the people we liaised with were bright enough. Rob Eales - the head of the section - was a bright man, and rightly understood that overlending in good times is as much of a source of balance sheet damage as loan impairment brought on by persistent bad times.
This was in 1997/8, when everybody thought there was going to be a recession - and people like Peter Brain (PBrain) were touting a situation in which yen hit 240 to the USD.
That same year I gave a presentation to the Econometrics seminar, pointing out that according to my modelling, the odds of recession were less than 5% and that growth through to 2004 would average 4.1% a year.
But back to Westpac: they understood that in good times, people fail to put anything aside. Farmers go out and buy shiny new tractors, textile manufacturers raise employee wages to above poverty levels, and generally people act as if prosperity is eternal. Most of them do virtually all of their spending on credit. And even if prosperity is ongoing, overborrowing can lead to hardship if income growth fails to match rising debt costs.
Sounds obvious now - that banks should be prudent during good times, not ust react when thie crap hits the fan.
That was the theory we went with, and we furnished Westpac with our best guesses as to which industries had similar reaction profiles to a range of economic phenomena. It was really quite interesting stuff, and became the topic of my (unfinished) PhD.
I only mention it because lo and behold, that very same ethos - keep dancing until the music stops, and then try and find a chair - took over bank management in the mad scramble to ddrive up share values. Annd now everybody gets to have higher rates of tax (or theft through inflation - the same thing) for eternity.
Best move straight to the markets - I've got to be down at the cop shop in 45 minutes, and I'm sitting here in my underpants.
Major Market Indices
The broad market - the All Ordinaries (XAO) - dipped reasonably hard, registering a loss of 78.5 points (1.8%), finishing at 4291.3 points. The index hit an intraday high of 4335 at 2:27 pm, while the low for the day was 4249 - set at 10:45 am Sydney time. Both the intraday low and the close were at levels not seen since July 20th 2005 - one day after the "Time to Buy Volatility" post that got us long the VIX futures.
Total volume traded on the ASX was 1.58bn units, 20.4% above its 10-day average. The ASX's daily listing of all stocks included 1312 different 3-letter FPO's which traded (i.e., had non-zero trade volume). Of these, 285 issues rose, with volume in rising issues totalling 358.6m units; decliners numbered 788 counters, and between them they traded aggregate declining volume of 1.12bn shares.
Of the 496 All Ordinaries components, 127 rose while 319 fell. Volume was tilted in favour of the losers by a margin of 3.1:1, with 282.29m shares traded in gainers while 882.08m 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 67.2 points (1.53%), closing out the session at 4320.9 points.
| Name | Close | +/-(%) |
|---|---|---|
| All Ordinaries | 4291.30 | -78.50 (1.8%) |
| ASX 20 | 2549.50 | -36.30 (1.4%) |
| ASX 50 | 4313.10 | -61.90 (1.4%) |
| ASX 100 | 3535.90 | -58.20 (1.6%) |
| ASX 200 | 4320.90 | -67.20 (1.5%) |
| ASX 300 | 4300.60 | -69.10 (1.6%) |
| ASX Mid-Cap 50 | 4049.00 | -127.70 (3.1%) |
| ASX Small Ordinaries | 2165.20 | -26.00 (1.2%) |
The "heavy hitters" of the Australian market - the ASX 20 Leaders (XTL) - registered a loss of 36.3 points (1.4%), closing out the session at 2549.5 points.
Among the 20 big guns, 6 index components finished to the upside, and of the rest, 15 closed lower for the session. The 21 stocks which make up the index traded a total of 182.65m units; 6 index components rose, with rising volume amounting to 35.8m shares, while the 15 decliners had volume traded totalling 146.85m units. The major percentage gainers within the index were
- Newcrest Mining (NCM), +$3.50 (15.09%) to $26.70 on volume of 4.7 million shares;
- Brambles (BXB), +$0.24 (3.27%) to $7.59 on volume of 14 million shares;
- CSL (CSL), +$1.23 (3.25%) to $39.03 on volume of 3.2 million shares;
- AMP (AMP), +$0.12 (1.84%) to $6.65 on volume of 6 million shares; and
- Woolworths (WOW), +$0.40 (1.45%) to $28.00 on volume of 3.6 million shares.
On the less salubrious side of the big-cap fence, the following stocks were the worst-performed within the index:
- Stockland (SGP), -$0.33 (6.31%) to $4.90 on volume of 5.8 million shares;
- Commonwealth Bank Of Australia (CBA), -$2.75 (6.09%) to $42.40 on volume of 10.5 million shares;
- Westfield Group (WDC), -$0.98 (5.68%) to $16.27 on volume of 11.4 million shares;
- Woodside Petroleum (WPL), -$2.28 (5.16%) to $41.92 on volume of 3.5 million shares; and
- Rio Tinto (RIO), -$3.11 (3.83%) to $78.01 on volume of 3.1 million shares.
At the other end of the market-cap spectrum, the ASX Small Ordinaries (XSO) registered a loss of 26 points (1.19%), closing out the session at 2165.2 points.
Among the stocks that make up the Small Caps index, 61 index components finished to the upside, and of the rest, 133 closed lower for the session.
The 208 stocks which make up the index traded a total of 416.94m units: volume in the 61 gainers totalling 135.64m shares, with trade totalling 266.14m units in the index's 133 declining components. The major percentage gainers within the index were- Paperlinx (PPX), +$0.38 (27.78%) to $1.73 on volume of 3.2 million shares;
- Nido Petroleum (NDO), +$0.04 (21.88%) to $0.20 on volume of 21 million shares;
- Newmont Mining Corporation. (NEM), +$0.70 (15.56%) to $5.20 on volume of 325.2 thousand shares;
- Coeur d'Alene Mines Corporation (CXC), +$0.25 (15.31%) to $1.85 on volume of 482.5 thousand shares; and
- St Barbara (SBM), +$0.04 (14.89%) to $0.27 on volume of 16.4 million shares.
In the red-zone of the little-stock index, the following list represents the biggest downers (in terms of percentage decline):
- Sundance Resources (SDL), -$0.04 (25%) to $0.12 on volume of 20 million shares;
- Imdex (IMD), -$0.21 (24.71%) to $0.64 on volume of 1.3 million shares;
- Jabiru Metals (JML), -$0.05 (23.26%) to $0.17 on volume of 6.4 million shares;
- Karoon Gas Australia (KAR), -$0.69 (21.97%) to $2.45 on volume of 1.1 million shares; and
- Mirabela Nickel (MBN), -$0.63 (21.28%) to $2.33 on volume of 175.6 thousand shares.
Index Changes
| Code | Name | Close | +/- | % | Volume |
|---|---|---|---|---|---|
| XAO | All Ordinaries | 4291.3 | -78.5 | -1.8 | 1201.7m |
| XFL | ASX 50 | 4313.1 | -61.9 | -1.41 | 407m |
| XJO | ASX 200 | 4320.9 | -67.2 | -1.53 | 961.4m |
| XKO | ASX 300 | 4300.6 | -69.1 | -1.58 | 1119.1m |
| XMD | ASX Mid-Cap 50 | 4049 | -127.7 | -3.06 | 304.4m |
| XSO | ASX Small Ordinaries | 2165.2 | -26 | -1.19 | 407.8m |
| XTL | ASX 20 | 2549.5 | -36.3 | -1.4 | 176.8m |
| XTO | ASX 100 | 3535.9 | -58.2 | -1.62 | 711.3m |
Market Breadth
| ASX20 | XTO | XJO | XAO | XSO | Market | |
|---|---|---|---|---|---|---|
| Advances | 6 | 28 | 67 | 127 | 61 | 285 |
| Declines | 15 | 73 | 132 | 319 | 133 | 788 |
| Advancing Volume | 35.8m | 138.6m | 229.2m | 282.3m | 135.6m | 358.6m |
| Declining Volume | 146.8m | 583.7m | 745.9m | 882.1m | 266.1m | 1.12bn |
GICS Industry Indices
Among the 11 industry indices, it was pretty much even stevens, with a very slight lead to the duds... the 5 that had an "up" day were just shaded by the remaining 6 which didn't.
The best performing index was Healthcare (XHJ), which added 243.5 points (2.66%) to 9383.1 points. The 9 stocks which make up the index traded a total of 14.76m units; 7 index components rose, with rising volume amounting to 13.27m shares, while the 2 decliners had volume traded totalling 1.5m units. The major percentage gainers within the index were
- Sigma Pharmaceuticals Ltd (SIP), +$0.06 (4.17%) to $1.38 on volume of 2.6 million shares;
- Healthscope (HSP), +$0.18 (4.14%) to $4.53 on volume of 1.1 million shares;
- ResMed Inc. (RMD), +$0.21 (3.95%) to $5.52 on volume of 3.7 million shares;
- CSL (CSL), +$1.23 (3.25%) to $39.03 on volume of 3.2 million shares; and
- Ansell (ANN), +$0.28 (2.2%) to $13.00 on volume of 1.2 million shares.
Second in the index leadership stakes was Information Technology (XIJ), which gained 5.2 points (1.11%) to 475.4 points. The 2 stocks which make up the index traded a total of 2.63m units; only one ofthose two rose -
- Computershare (CPU), +$0.11 (1.32%) to $8.46 on volume of 2.1 million shares.
The bronze medal for today goes to Utilities (XUJ), which climbed 47.5 points (1.02%) to 4723.1 points. The 10 stocks which make up the index traded a total of 43.03m units; 7 index components rose, with rising volume amounting to 24.1m shares, while the 3 decliners had volume traded totalling 18.92m units. The major percentage gainers within the index were
- Babcock & Brown Wind Partners Group (BBW), +$0.04 (3.83%) to $1.09 on volume of 4.6 million shares;
- Spark Infrastructure Group (SKI), +$0.06 (3.49%) to $1.63 on volume of 3.9 million shares;
- APA Group (APA), +$0.08 (2.48%) to $3.30 on volume of 837 thousand shares;
- AGL Energy (AGK), +$0.08 (0.59%) to $13.70 on volume of 1.5 million shares; and
- Hastings Diversified Utilities Fund (HDF), +$0.01 (0.45%) to $2.25 on volume of 376.8 thousand shares.
The worst-performed index for the session was Property Trusts (XPJ), which dipped 94.9 points (7.07%) to 1247.6 points. The 21 stocks which make up the index traded a total of 208.7m units; The 19 decliners had volume traded totalling 205.27m units, and 2 index components rose, with rising volume amounting to 3.44m shares, The major percentage decliners within the index were
- Valad Property Group (VPG), -$0.13 (50%) to $0.13 on volume of 40.3 million shares;
- Goodman Group (GMG), -$0.32 (15.46%) to $1.75 on volume of 24.1 million shares;
- ING Industrial Fund (IIF), -$0.18 (13.62%) to $1.11 on volume of 5.2 million shares;
- Apn/Uka European Retail Property Group (AEZ), -$0.02 (12.9%) to $0.14 on volume of 6.3 million shares; and
- Macquarie DDR Trust (MDT), -$0.03 (12.5%) to $0.21 on volume of 6.8 million shares.
Just missing out on the wooden spoon was Energy (XEJ), which slid 604.5 points (4.44%) to 13016.1 points. The 19 stocks which make up the index traded a total of 78.59m units; The 15 decliners had volume traded totalling 69.71m units, and 2 index components rose, with rising volume amounting to 7.05m shares, The major percentage decliners within the index were
- Nexus Energy (NXS), -$0.14 (18.3%) to $0.63 on volume of 12.1 million shares;
- Queensland Gas Company (QGC), -$0.32 (9.85%) to $2.93 on volume of 3.9 million shares;
- Arrow Energy (AOE), -$0.2 (8.33%) to $2.20 on volume of 4.1 million shares;
- Santos (STO), -$1.21 (7.9%) to $14.10 on volume of 5.2 million shares; and
- Roc Oil Company (ROC), -$0.06 (7.89%) to $0.70 on volume of 3.4 million shares.
Third-to-last amongst the sector indices was Industrials (XNJ), which slid 94.2 points (2.3%) to 4003.9 points. The 32 stocks which make up the index traded a total of 118.31m units; The 25 decliners had volume traded totalling 95.98m units, and 7 index components rose, with rising volume amounting to 22.33m shares, The major percentage decliners within the index were
- NRW Holdings (NWH), -$0.24 (19.83%) to $0.95 on volume of 4.1 million shares;
- Bradken (BKN), -$0.84 (11.02%) to $6.78 on volume of 1.2 million shares;
- Leighton Holdings (LEI), -$2.84 (7.88%) to $33.21 on volume of 1.4 million shares;
- United Group (UGL), -$0.78 (6.51%) to $11.20 on volume of 766 thousand shares; and
- Downer Edi (DOW), -$0.35 (6.09%) to $5.40 on volume of 2.4 million shares.
Sector Indices
| Code | GICS Sector | Close | +/- | % | Volume |
|---|---|---|---|---|---|
| XHJ | Healthcare | 9383.1 | 243.5 | 2.66 | 15m |
| XIJ | Information Technology | 475.4 | 5.2 | 1.11 | 3m |
| XUJ | Utilities | 4723.1 | 47.5 | 1.02 | 43m |
| XMJ | Materials | 9910.1 | 54.1 | 0.55 | 286m |
| XSJ | Consumer Staples | 6918.8 | 26.9 | 0.39 | 39m |
| XDJ | Consumer Discretionary | 1472.1 | -5.9 | -0.4 | 53m |
| XXJ | Financials ex Property Trusts | 4710.3 | -105.4 | -2.19 | 97m |
| XTJ | Telecommunications | 1415 | -32.1 | -2.22 | 52m |
| XNJ | Industrials | 4003.9 | -94.2 | -2.3 | 118m |
| XEJ | Energy | 13016.1 | -604.5 | -4.44 | 79m |
| XPJ | Property Trusts | 1247.6 | -94.9 | -7.07 | 209m |
All Ordinaries Major Movers
All Ords Volume Leaders
| Code | Name | Close | +/- | % | Volume |
|---|---|---|---|---|---|
| TLS | Telstra Corporation Limited. | 4.15 | -0.11 | -2.58 | 43.9m |
| VPG | Valad Property Group | 0.13 | -0.13 | -50 | 40.3m |
| MGX | Mount Gibson Iron | 0.88 | -0.28 | -24.24 | 35.2m |
| OZL | OZ Minerals Limited | 1.23 | -0.06 | -4.3 | 27.1m |
| LGL | Lihir Gold Limited | 2.64 | 0.28 | 11.86 | 24.2m |
All Ords Percentage Gainers
| Code | Name | Close | +/- | % | Volume |
|---|---|---|---|---|---|
| BOC | Bougainville Copper Limited | 0.94 | 0.24 | 33.57 | 4.2k |
| PPX | Paperlinx Limited | 1.73 | 0.38 | 27.78 | 3.2m |
| NDO | Nido Petroleum Limited | 0.20 | 0.04 | 21.88 | 21m |
| CNT | Centamin Egypt Limited | 0.73 | 0.13 | 21.67 | 167.2k |
| NEM | Newmont Mining Corporation. | 5.20 | 0.70 | 15.56 | 325.2k |
All Ords Percentage Losers
| Code | Name | Close | +/- | % | Volume |
|---|---|---|---|---|---|
| VPG | Valad Property Group | 0.13 | -0.13 | -50 | 40.3m |
| EZL | Euroz Limited | 1.10 | -1.10 | -50 | 40.9k |
| ARR | Arasor International Limited | 0.07 | -0.02 | -26.14 | 348.7k |
| SDL | Sundance Resources Limited | 0.12 | -0.04 | -25 | 20m |
| IMD | Imdex Limited | 0.64 | -0.21 | -24.71 | 1.3m |
