Sellers get the upper hand, ASX down more than 100pts

James Gerrish

Market Matters

The market embraced the overseas weakness today with the local index down more than 100pts, a sell-off we’ve been targeting and a reminder that selling is often more aggressive than buying – the expression of up the stairs and down the lift springs to mind. Selling was broad based as you’d expect with the IT stocks feeling most pain down -2.41% as a sector, although from an index perspective, the financials provided most weight, the big 4 banks accounting for 25% of the markets decline with NAB the weakest link – more on that below.

US Futures was fairly quiet during our time zone, while the Chinese market is closed and the rest of Asia was down, but not materially so.

Bright spots locally were fairly limited, Gold was up on the session while the bearish ETF we recently added to the MM Platinum Portfolio did its job – overall, a combination of higher cash, decent gold exposure and a negative facing ETF helped the portfolio outperform today. Tomorrow we’ll send out the monthly performance reports for the Market Matters SMA’s which are aligned with the portfolios we discuss in these notes. The growth orientated portfolio added +3.75% for the month while the Income portfolio added +2.90%. If you would like to be included on the monthly performance reports, please email info@marketmatters.com.au

Overall, the ASX 200 lost -102pts today or -1.53% to 6639, Dow Futures are trading up +40pts/+0.15%.

ASX 200 Chart

ASX 200 Chart

CATCHING MY EYE;

NAB -2.29%; was the worst of the big 4 today thanks to a pre-market announcement. NAB boosted their 2H customer remediation charges to $1.2b pre-tax, taking the total to nearly $2.5b since the start of FY18. NAB looks to have taken a more lenient stance to remediation, taking on more claims even if little paperwork has been provided – something the regulator will love, but shareholders not so much.

The market was expecting a figure around half of today’s announcement which may lead to a miss at the dividend if NAB can’t replace the lost capital. The announcement also noted a significant write-off of their software assets by $494m. The bank still holds the highest value for their software at around $2.5b despite the latest write down, the closest competitor being WBC at $2.2b. This is bearish news for others in the sector including AMP & IOOF.

NAB Chart

Mayne Pharma (MYX) +18.87%; A rare bright spot today after MYX inked a deal that could see plant based women’s contraceptive pill to be sold into the US. The 20-year deal with a Belgium pharmaceutical company gives exclusive supply & licence rights into the US market which is estimated to be worth over $US6bn. The new product is subject to regulatory approval and won’t start selling until 2021 at the earliest, however it does show the upside potential for Mayne’s offering + its coming off a very low base.

Mayne Pharma (MYX) Chart

BROKER MOVES;

· WiseTech Downgraded to Accumulate at Blue Ocean; PT A$35.40 – Not sure how that rating works??

Never miss an update

Market Matters publishes daily market reports and sends SMS alerts when we transact on our portfolio. To get our latest market views and hear when we take new positions, trial Market Matters for 14 days at no cost by clicking here.


1 topic

2 stocks mentioned

James Gerrish
Portfolio Manager
Market Matters

James is Portfolio Manager & Primary Author at Market Matters, a daily investment report with over 2500 subscribers that offers real market insight. He is also Senior Portfolio Manager within Shaw and Partners heading up a team that manages...

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.