Post by Matilda on Aug 6, 2015 20:36:55 GMT 10
ASX Dragged Down By Banks As ANZ Starts $3b Capital Raise
Heavy selling in the big banks, triggered by news of ANZ's capital raising, drove the sharemarket lower on Thursday, obscuring a rally among miners.
The All Ordinaries closed 59 points, or by 1.1 per cent, at 5600 points, while the S&P/ASX 200 index closed at 5610.1, 64 points lower.
The banks lost value as people sold down their shares to buy the discounted ANZ stocks.
ANZ Banking Group sparked the decline in the banking stocks by announcing on Thursday morning it was raising $3 billion in additional capital from shareholders.
The capital will go towards boosting the bank's reserves in response to new rules from the Australian Prudential Regulation Authority that aim to make the nation's lenders more resilient to financial shocks (or as one TV news stated - another GFC)
Watermark Funds Management bank analyst Omkar Joshi said heavy losses among the lending giants in part reflected worries about their future profitability.
"The banks lost value as people sold down their shares to buy the discounted ANZ stocks, but also because ANZ said the capital raise was due to broad-based issues in the deterioration in credit quality and rising bad debts," Mr Joshi said.
ANZ Banking Group entered a trading halt on Thursday but all the other big banks were down. The Commonwealth Bank closed 3.2 per cent down on $84.55, the National Australia Bank was down 2.2 per cent to close at $33.59 and Westpac Banking Group closed down by 3 per cent to $33.44.
The Commonwealth Bank will report its full-year earnings on Thursday and Westpac will announce a mid-year update next Wednesday.
Mr Joshi said bank stocks were likely to lose value throughout the following month or so but would recover once their capital management plans were completed.
While the banks were shedding value, the other ASX heavyweights, the large miners, were surging on the back of a slightly higher iron ore price after weeks of declining value.
"Resource stocks profited directly from the rise in the spot price, while also helping the sector was yesterday's rumours of a potential pick up in Chinese steal demand and also reports of Chinese interest in the infrastructure assets of Fortescue," Quay Equities head of trading Tristan K'nell said.
After market close, Rio Tinto reported a 43 per cent drop in first-half underlying profits, to $US2.9 billion ($4 billion) from $US5.1 billion a year earlier. That was ahead of the consensus analyst forecast of $US2.5 billion, on Bloomberg data.
Rio Tinto closed at $53.55, up by 1.1 per cent while BHP Billiton closed at $26.69 up by 0.8 per cent. Smaller miners also rallied throughout the day, with former BHP spin-off South32 closing up 0.9 per cent at $1.74, Newcrest Mining closing up 2.55 per cent at $11.26, and Fortescue Metals Group closing up 1.3 per cent at $1.91.
The biggest gains of the day were enjoyed by OzForex, up 12.4 per cent to close at $2.54 after the release of an ambitious new strategy, and retailer Kathmandu Holdings, after the company's board announced it would reject a takeover offer and provided an upbeat trading update. The stock climbed 8.9 per cent to finish at $1.65.
The biggest losses of the day were sustained by engineering company Downer EDI, down 11.4 per cent to $4.06 as its profit results revealed the business continued to struggle with the drop in mining investment activity, and Genworth Mortgage Insurance Australia, which plunged 10.3 per cent to $3.15 after its major shareholder, the US-based Genworth Financial, said it was actively assessing its stake.
When was the last time you heard of a bank doing this??
From. www.smh.com.au/business/markets/asx-dragged-down-by-banks-as-anz-starts-3b-capital-raise-20150806-git3nq.html
Heavy selling in the big banks, triggered by news of ANZ's capital raising, drove the sharemarket lower on Thursday, obscuring a rally among miners.
The All Ordinaries closed 59 points, or by 1.1 per cent, at 5600 points, while the S&P/ASX 200 index closed at 5610.1, 64 points lower.
The banks lost value as people sold down their shares to buy the discounted ANZ stocks.
ANZ Banking Group sparked the decline in the banking stocks by announcing on Thursday morning it was raising $3 billion in additional capital from shareholders.
The capital will go towards boosting the bank's reserves in response to new rules from the Australian Prudential Regulation Authority that aim to make the nation's lenders more resilient to financial shocks (or as one TV news stated - another GFC)
Watermark Funds Management bank analyst Omkar Joshi said heavy losses among the lending giants in part reflected worries about their future profitability.
"The banks lost value as people sold down their shares to buy the discounted ANZ stocks, but also because ANZ said the capital raise was due to broad-based issues in the deterioration in credit quality and rising bad debts," Mr Joshi said.
ANZ Banking Group entered a trading halt on Thursday but all the other big banks were down. The Commonwealth Bank closed 3.2 per cent down on $84.55, the National Australia Bank was down 2.2 per cent to close at $33.59 and Westpac Banking Group closed down by 3 per cent to $33.44.
The Commonwealth Bank will report its full-year earnings on Thursday and Westpac will announce a mid-year update next Wednesday.
Mr Joshi said bank stocks were likely to lose value throughout the following month or so but would recover once their capital management plans were completed.
While the banks were shedding value, the other ASX heavyweights, the large miners, were surging on the back of a slightly higher iron ore price after weeks of declining value.
"Resource stocks profited directly from the rise in the spot price, while also helping the sector was yesterday's rumours of a potential pick up in Chinese steal demand and also reports of Chinese interest in the infrastructure assets of Fortescue," Quay Equities head of trading Tristan K'nell said.
After market close, Rio Tinto reported a 43 per cent drop in first-half underlying profits, to $US2.9 billion ($4 billion) from $US5.1 billion a year earlier. That was ahead of the consensus analyst forecast of $US2.5 billion, on Bloomberg data.
Rio Tinto closed at $53.55, up by 1.1 per cent while BHP Billiton closed at $26.69 up by 0.8 per cent. Smaller miners also rallied throughout the day, with former BHP spin-off South32 closing up 0.9 per cent at $1.74, Newcrest Mining closing up 2.55 per cent at $11.26, and Fortescue Metals Group closing up 1.3 per cent at $1.91.
The biggest gains of the day were enjoyed by OzForex, up 12.4 per cent to close at $2.54 after the release of an ambitious new strategy, and retailer Kathmandu Holdings, after the company's board announced it would reject a takeover offer and provided an upbeat trading update. The stock climbed 8.9 per cent to finish at $1.65.
The biggest losses of the day were sustained by engineering company Downer EDI, down 11.4 per cent to $4.06 as its profit results revealed the business continued to struggle with the drop in mining investment activity, and Genworth Mortgage Insurance Australia, which plunged 10.3 per cent to $3.15 after its major shareholder, the US-based Genworth Financial, said it was actively assessing its stake.
When was the last time you heard of a bank doing this??
From. www.smh.com.au/business/markets/asx-dragged-down-by-banks-as-anz-starts-3b-capital-raise-20150806-git3nq.html