Oops, no one saw that coming.
After the ASX overnight futures market on Saturday was signally a 30 point fade at the start of trading in Australia yesterday, no one could have foreseen the nasty 2.3% slump in the index as bank investors took fright at the move by APRA, the banking and finance regulator, to sack five senior executives of wealth manager, IOOF and place tough restrictions on its superannuation business.
IOOF shares fell another 7% yesterday on top of Friday’s 35% collapse and the CEO and chair stepped down to fight the APRA move (and three other executives named by the regulator said they would not have any management role at the company but would remain with the company. (See separate story).
Earlier Bank of Queensland said it was unable to complete the $65 million sale of its St Andrews Insurance business to Freedom Insurance Group which was adversely mentioned at the royal commission and has seen its shares collapse to the point where there is doubt about its future (See separate).
Freedom shares fell another 11% yesterday to 2.3 cents after last week’s 58% slump.
Both announcements sent tremors through the financial sector – ANZ will probably not go through with the $975 million sale of its OnePath wealth management business to IOOF, and the AMP remains in limbo as its shares weaken.
Weak Chinese trade details for November didn’t help – especially the sharp slowdown in export and import growth. Exports rose 5.4% over a year ago to $US227.4 billion, a marked slowing from the previous month’s 12.6% increase.
Imports rose 3% to $US182.7 billion, a sharp slowing from October’s 20.3% surge. But oil imports surged to record levels.
So by the end of the day it was not a surprise that the ASX weakened – but by 129 points, or 2.3%, to a new 23 month low? That was certainly a shock.
The close for the ASX of 5552.5 was within 20 points of a two-year low.
A warning from the senior RBA executive that the banks face a rise in the cost of offshore raisings didn’t help. Commonwealth Bank fell 3% to $68.27, Westpac slid 3.4% to $24.86, ANZ went down (another) 4.2 to $24.64 and NAB closed 2.5% lower at $23.39.
Macquarie Group also fell – down 3% to $109.89, Insurance Australia Group slid 3.2% to $6.89 and Suncorp Group closed 2.4% lower at $12.99.
AMP shares (its seen as in the same boat at IOOF by some analysts) ended at a new all time low of $2.28 yesterday, down more than 2%.
Healthcare also sold off heavily with CSL down 4% lower at $176.64, Cochlear off 5% at $165.73 and Nanosonics lost 6.1% to $2.91.
Local tech stocks took another hammering in the wake of Nasdaq’s sell down last Friday.
Wisetech Global shares lost 4.8% to $17.35, Appen closed 6.2% lower at $12.61, Afterpay Touch fell 5.7% to $11.97, Altium dropped 4.8% to $20.84 and Xero lost 4% to end the session at $37.20.
Gold miners did OK – Regis Resources rose 5.2% to $4.44, Northern Star was up 2.7% at $8.42, Evolution Mining rose 2.5% to $3.30, Resolute Mining ended 2.5% higher at $1.03 and Newcrest Mining brought up the rear with a 1.6% gain to $21.30.
Shares in AHG, the country’s biggest car dealer, fell more than 10% yesterday to $1.47 and seem to be in a spot of bother. The shares are down 35% in the past three months.
And shares in Seven West Media fell more than 9% to 59 cents, wiping out all the gains mid-year. The shares are now down 4% for the year so far.
