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Sometimes you just have to watch a bounce come and go - simply because it doesn't tick all the boxes. I think I was pretty clear in the explanation as to why we didn't try to ride the bounce off the low 3000s (3200-ish, if memory serves); and particularly why I didn't take the hedges off the Model Portfolios. For the moment, the decision is panning out OK - I think we have much greater concerns than worrying about missing some mythical new bull market...
What we might be seeing here. is the start of a real problem: a market that washes off all its oversold condition really quickly, then craters on big volume. An index like the All Ords could, uinder that scenario, fall another 1000-1500 points really quickly, without really getting back to oversold (although at that point it would represent good value unless the economic future is even worse than I anticipate).
Anyone who got a Super Fund statement in recent days will be aware that things weren't looking flash as at the end of September (the quarter-end); imagine then, what December statements will look like.
Now - when do you think fund redemptions will start in earnest?
We all know that Australian workers can't 'cash out' - they are locked in a death embrace with this market unless they chose "Capital Preservation": options... which are invariably not the default. the stock-selling and ticket-clipping industries saw to that. So most Strayan workers have an allocation of at least 25% stocks, and usually some international equities as well (up to 10% of a 'balanced conservative' portfolio).
Since both international equities and domestic equities have been absolutely caned in the last few months, returns to super funds will be abysmal. Those reports will arrive in late February, if memory serves.
Anyhow - Strayan workers can switch their allocations; they can move to another manager, or they can dial down the allocation to risky assets. Problem is, many folks who are retiring in the next 10 years can't afford to dial down the risk - because they don't have enough super to begin with. Still, the market's decline will spook them and they will dial down the risk anyhow.
What that means, is a flow of invested funds out of equities and in to cash.
If history is any guide, there will be a bunch of people who will then switch their super to Cash (Capital Preservation) and another (smaller) bunch who will see that Bond funds will have performed strongly and will, in desperation, switch to that sector. But bonds are making swing highs, dear Reader... you mark my words.
So the redemptions that will result from this latest bunch of Super Reports, will still involve switches out of stocks and into bonds (but mostly, into Capital Preservation) - but it won't be as big as the switches that resutl from the reports for December.
By the middle of next year, I am prepared to bet that Cash and Enhanced Cash funds will have experienced inflows that are unprecedented in the history of the super industry in Straya... and suddenly people will understand things like 'negative duration' and 'dumb-bell bond portfolios'. Then bond managers will do something stupid in order to try and chase yield, and they will get scorched. Yay.
Nwo... with the Reverse Wankers having interfered again with the short-term price of credit, let's survey the wreckage...
Major Market Indices
The broad market - the All Ordinaries (XAO) - slid pretty savagely, posting a loss of 145.6 points (4.02%), finishing at 3473.4 points. The market closed at its low, having attempted to stage a mild rally in the leadup to the Reverse Bank's rate decision.
Total volume traded on the ASX was 1.04bn units, 12.6% below its 10-day average of 1.19bn shares.The ASX's daily listing of all stocks included 1007 different 3-letter FPO's which traded (i.e., had non-zero trade volume). Of these, 204 issues rose, with volume in rising issues totalling 177.4m units; there were 601 declining stocks, which traded aggregate declining volume of 748m shares.
Of the 488 All Ordinaries components, 73 rose while 345 fell. Volume was tilted in favour of the losers by a margin of 5:1, with 131.43m shares traded in gainers while 662.44m shares traded in the day's losers.
The Index that forms the cash basis for the SPI Futures - the S&P/ASX 200 (XJO) - dipped rather savagely, losing 153 points (4.16%), closing out the session at 3528.2 points.
| Name | Close | +/-(%) |
|---|---|---|
| All Ordinaries | 3473.40 | -145.60 (4.0%) |
| ASX 20 | 2126.60 | -99.20 (4.5%) |
| ASX 50 | 3574.90 | -160.50 (4.3%) |
| ASX 100 | 2910.90 | -127.60 (4.2%) |
| ASX 200 | 3528.20 | -153.00 (4.2%) |
| ASX 300 | 3508.60 | -151.30 (4.1%) |
| ASX Mid-Cap 50 | 3162.60 | -112.30 (3.4%) |
| ASX Small Ordinaries | 1601.60 | -55.30 (3.3%) |
The "heavy hitters" of the Australian market - the ASX 20 Leaders (XTL) - were taken to the woodshed somewhat, sliding 99.2 points (4.46%), closing out the session at 2126.6 points.
Among the 20 big guns, just 2 index components finished to the upside, and 18 lost ground. The stocks which make up the index traded a total of 147.14m units; 2 index components rose, with rising volume amounting to 41.21m shares, while the 18 decliners had volume traded totalling 101.17m units. The only gainers within the index were
- Telstra Corporation. (TLS), +$0.09 (2.22%) to $4.14 on volume of 37.3 million shares; and
- Origin Energy (ORG), +$0.33 (2.11%) to $15.98 on volume of 3.9 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), -$3.91 (12.98%) to $26.21 on volume of 1.8 million shares;
- Woodside Petroleum (WPL), -$3.79 (10.47%) to $32.41 on volume of 2 million shares;
- BHP Billiton (BHP), -$2.87 (9.6%) to $27.03 on volume of 19.4 million shares;
- RIO Tinto (RIO), -$3.7 (8.67%) to $39.00 on volume of 5.8 million shares; and
- Stockland (SGP), -$0.34 (7.83%) to $4.00 on volume of 7.9 million shares.
The ASX Small Ordinaries (XSO), while still dropping overall, did significantly better than its large-cap counterpart. The Small Ords copped a bit of a hiding, sliding 55.3 points (3.34%), closing out the session at 1601.6 points.
Among the stocks that make up the Small Caps index, 29 index components finished to the upside, and of the rest, 160 closed lower for the session.
The 208 stocks which make up the index traded a total of 250.25m units: volume in the 29 gainers totalling 19.01m shares, with trade totalling 212.51m units in the index's 160 declining components. The major percentage gainers within the index were- Becton Property Group (BEC), +$0.03 (23.81%) to $0.13 on volume of 1.2 million shares;
- Deep Yellow (DYL), +$0.01 (9.52%) to $0.12 on volume of 1.3 million shares;
- Bannerman Resources (BMN), +$0.05 (8.77%) to $0.62 on volume of 2.1 million shares;
- City Pacific Limited (CIY), +$0.01 (7.58%) to $0.07 on volume of 91.7 thousand shares; and
- Australand Property Group (ALZ), +$0.02 (7.14%) to $0.30 on volume of 1.6 million shares.
In the red-zone of the little-stock index, the following list represents the biggest downers (in terms of percentage decline):
- Rubicon America Trust (RAT), -$0 (30.77%) to $0.01 on volume of 2.9 million shares;
- NRW Holdings (NWH), -$0.07 (25.93%) to $0.20 on volume of 5.4 million shares;
- Albidon (ALB), -$0.05 (20%) to $0.18 on volume of 920.7 thousand shares;
- HFA Holdings (HFA), -$0.03 (19.35%) to $0.13 on volume of 3.5 million shares; and
- Admiralty Resources NL (ADY), -$0 (18.18%) to $0.01 on volume of 8.7 million shares.
Index Changes
| Code | Name | Close | +/- | % | Volume |
|---|---|---|---|---|---|
| XAO | All Ordinaries | 3473.4 | -145.6 | -4.02 | 856.1m |
| XFL | ASX 50 | 3574.9 | -160.5 | -4.3 | 324.5m |
| XJO | ASX 200 | 3528.2 | -153 | -4.16 | 758.4m |
| XKO | ASX 300 | 3508.6 | -151.3 | -4.13 | 824.1m |
| XMD | ASX Mid-Cap 50 | 3162.6 | -112.3 | -3.43 | 261.4m |
| XSO | ASX Small Ordinaries | 1601.6 | -55.3 | -3.34 | 238.2m |
| XTL | ASX 20 | 2126.6 | -99.2 | -4.46 | 139.2m |
| XTO | ASX 100 | 2910.9 | -127.6 | -4.2 | 585.9m |
Market Breadth
| ASX20 | XTO | XJO | XAO | XSO | Market | |
|---|---|---|---|---|---|---|
| Advances | 2 | 12 | 27 | 73 | 29 | 204 |
| Declines | 18 | 84 | 168 | 345 | 160 | 601 |
| Advancing Volume | 41.2m | 108.1m | 120.2m | 131.4m | 19m | 177.4m |
| Declining Volume | 101.2m | 445.7m | 594.7m | 662.4m | 212.5m | 748m |
GICS Industry Indices
Among the 11 industry indices, today's market action was dominated by sectoral declines - only one sector managed a gain for the day.
The best performing index was Telecommunications (XTJ), which added 26.1 points (1.92%) to 1385.6 points. This index only contains 3 stocks; they traded a total of 43.51m units today. The lone rising index component had volume amounting to 37.27m shares, while the 2 decliners had volume traded totalling 6.24m units. The major percentage gainers within the index were
- Telstra Corporation. (TLS), +$0.09 (2.22%) to $4.14 on volume of 37.3 million shares.
The worst-performed index for the session was Materials (XMJ), which dipped 609.9 points (7.25%) to 7802.2 points. The 45 stocks which make up the index traded a total of 207m units; The 35 decliners had volume traded totalling 141.62m units, and 4 index components rose, with rising volume amounting to 27.81m shares, The major percentage decliners within the index were
- Mount Gibson Iron (MGX), -$0.06 (17.14%) to $0.29 on volume of 27.4 million shares;
- Kingsgate Consolidated (KCN), -$0.43 (15.93%) to $2.27 on volume of 314.2 thousand shares;
- Coeur d'Alene Mines Corporation (CXC), -$0.12 (12%) to $0.88 on volume of 157.9 thousand shares;
- Nufarm (NUF), -$1.02 (11.67%) to $7.72 on volume of 1.5 million shares; and
- Kagara Zinc (KZL), -$0.06 (11.65%) to $0.46 on volume of 1.4 million shares.
Just missing out on the wooden spoon was Property Trusts (XPJ), which slid 56.3 points (5.5%) to 966.8 points. The 21 stocks which make up the index traded a total of 139.7m units; none of the index components ended with a gain. The major percentage decliners within the index were
- Tishman Speyer Office Fund (TSO), -$0.03 (13.04%) to $0.20 on volume of 922.8 thousand shares;
- Valad Property Group (VPG), -$0.01 (11.54%) to $0.05 on volume of 11.8 million shares;
- Macquarie Office Trust (MOF), -$0.03 (10.17%) to $0.27 on volume of 8.8 million shares;
- Centro Properties Group (CNP), -$0.01 (8.7%) to $0.06 on volume of 4.4 million shares; and
- Commonwealth Property Office Fund (CPA), -$0.11 (8.49%) to $1.19 on volume of 4.8 million shares.
Third-to-last amongst the sector indices was Information Technology (XIJ), which slid 19.7 points (5.32%) to 350.4 points. The 2 stocks which make up the index traded a total of 3.16m units; both of the index components ended with a loss. The fallout was as follows:
- Computershare (CPU), -$0.39 (5.95%) to $6.16 on volume of 2.9 million shares; and
- Iress Market Technology (IRE), -$0.02 (0.48%) to $4.12 on volume of 307.5 thousand shares.
Sector Indices
| Code | GICS Sector | Close | +/- | % | Volume |
|---|---|---|---|---|---|
| XTJ | Telecommunications | 1385.6 | 26.1 | 1.92 | 44m |
| XDJ | Consumer Discretionary | 1092.3 | -16 | -1.44 | 47m |
| XUJ | Utilities | 4347.7 | -87.3 | -1.97 | 72m |
| XHJ | Healthcare | 8314.1 | -179.4 | -2.11 | 11m |
| XSJ | Consumer Staples | 6181.9 | -135.3 | -2.14 | 31m |
| XXJ | Financials ex Property Trusts | 3729.4 | -155.2 | -4 | 65m |
| XNJ | Industrials | 2930.3 | -127.2 | -4.16 | 105m |
| XEJ | Energy | 11624.5 | -574.6 | -4.71 | 40m |
| XIJ | Information Technology | 350.4 | -19.7 | -5.32 | 3m |
| XPJ | Property Trusts | 966.8 | -56.3 | -5.5 | 140m |
| XMJ | Materials | 7802.2 | -609.9 | -7.25 | 207m |
All Ordinaries Major Movers
All Ords Volume Leaders
| Code | Name | Close | +/- | % | Volume |
|---|---|---|---|---|---|
| BBI | Babcock & Brown Infrastructure Group | 0.09 | -0.01 | -10.53 | 43.6m |
| TLS | Telstra Corporation. | 4.14 | 0.09 | 2.22 | 37.3m |
| FMG | Fortescue Metals Group Ltd | 2.50 | 0.00 | 0 | 27.4m |
| MGX | Mount Gibson Iron | 0.29 | -0.06 | -17.14 | 27.4m |
| GPT | GPT Group | 0.85 | -0.07 | -7.61 | 22.1m |
All Ords Percentage Gainers
| Code | Name | Close | +/- | % | Volume |
|---|---|---|---|---|---|
| ARR | Arasor International | 0.02 | 0.01 | 71.43 | 172.5k |
| PGA | Photon Group | 1.00 | 0.28 | 38.89 | 156.2k |
| BEC | Becton Property Group | 0.13 | 0.03 | 23.81 | 1.2m |
| WEC | White Energy Company | 1.70 | 0.30 | 21.43 | 103k |
| TGP | Trafalgar Corporate Group | 0.50 | 0.08 | 19.05 | 15k |
All Ords Percentage Losers
| Code | Name | Close | +/- | % | Volume |
|---|---|---|---|---|---|
| RAT | Rubicon America Trust | 0.01 | 0.00 | -30.77 | 2.9m |
| NWH | NRW Holdings | 0.20 | -0.07 | -25.93 | 5.4m |
| WVL | Windimurra Vanadium | 0.27 | -0.08 | -22.86 | 885.7k |
| ALB | Albidon | 0.18 | -0.05 | -20 | 920.7k |
| HFA | HFA Holdings | 0.13 | -0.03 | -19.35 | 3.5m |
