I appeared live on Channel News Asia on Monday morning at 8:30am SGT. My questions and my responses in the form of brief notes are below:
Q1. Last Friday, the ASX 200 suffered its biggest one day percentage loss in more than 3 years. Are we in for a rocky ride this week?
Probably not so much. The ASX 200 index continues to hold on well despite several attempts to push the market lower. The index fell heavily to close out last week yet found more support at the current key support level around 5400. This level has on several occasions held the index up in the face of strong selling. It is being called upon again presently. Should the 5400 level fail then you could easily see the index falling down to another key level around 5100 which held the index up well towards the end of 2014. Just for the minute it continues to trade within the established range between 5400 and 5700 with the previous highs around 6000 some distance away.
Q2. Bank shares, which account for a large chunk of the market, are leading the losses. Is the industry facing bad times ahead?
It is an interesting time. The S&P/ASX 200 Financials Sector has largely mirrored the ASX200 index throughout this year and equally is trading near 2015 lows and is trying to hang on. The exception to that is ANZ which fell to its lowest level since early 2014. The rest held above their key levels with $80 for CBA and $30 for NAB and Westpac. We routinely expect the big banks to report their multi-billion dollar profits however news of capital raising and increasing rates for investor loans casts a shadow on the performance of the banks.
Q3. ANZ raised a whopping US$2.5 billion through its new equity issue. Which lender will be next to follow in ANZ’s footsteps?
It really is anyone’s guess. You could probably push CBA to the end of the list due to their size and customer base. Which leaves NAB and Westpac and it is probably a toss up between those two, assuming another bank actually does ask for money.
Q4. Commodities are the most out-of-favour industry group in the stock market. Do they represent great value versus the rest of the market?
It really depends on how you view opportunities. To some investors they would definitely represent good value however you would want to have an expectation of their outlook and have confidence that fundamentally the future is looking OK. For me personally who is a technical analyst and looks at trends, they are of little interest to me presently.