Our market crashes more than the US market - why?

[Bill M]

Everytime there is a correction or a market crash our market gets hit almost twice as hard as the US market, why does this happen?

Some examples, in current correction we are down 25% and the US market is down about 16% from it's all time highs.

In 1987 during the sharemarket crash ours went down 41.8% and the US market went down 22.8%.

Is there any reason why we get hit hit twice as hard as the Americans?

 

[Nick Radge]

The 1970 - 1974 bear market is probably more aligned with what's going on now. The US dropped 45% and we dropped 66%.

I don't have an answer for you. As a guess it could be flight to quality, liquidity..not sure. Sorry!

 

[Rainmaker2000]

I don't have that answer, but only to say our valuations were coming off a higher base....banks used to be on a PE round 14........we have not even seen the mining sector have its correction, keeping some pop corn aside for that...

I don't agree with the 66% projection...hehe.......we are doing okay...just a little leveraged

 

[MRC & Co]

Perhaps due to the short-run fact that Australians can still gain real returns in cash.

Whereas, over in the US, they are left out to dry (unless they knew about gold).

Maybe Australians are just over-reactors?

 

[prawn_86]

Perhaps the fact that every monday we follow wall sts friday lead, meaning we never actually make a decison for ourselves...?

 

[ShareIt]

Less investors and volume usually equals more volatility.....

 

[Mofra]

Our local bourse is more than 40% foreign owned; the "small holdings" of a even a moderate US hedge fund represent greater volume on a smaller exchange such as ours, so any global sell-off is likely to hit us with reasonable resonance.

 

[Aussiejeff]

Our local bourse is more than 40% foreign owned; the "small holdings" of a even a moderate US hedge fund represent greater volume on a smaller exchange such as ours, so any global sell-off is likely to hit us with reasonable resonance.

Hi Mofra. Can you state the actual percentages relating to that quote? Is it 40.1% or 49.99% - the difference could be telling....

Whatever, I suspect you are right in that foreign players now have a significant stake at the World Poker Champs table, playing with El Cheapo Oz Chips....

For The Big Playerz, it's simply a case of "Too bad if the Lil' Ozzie Bleeder goes down.... plenty more Third World economies to ransack for cheap chips..."

Meanwhile, we here in Oz seem to carry on believing in a self-delusional perpetual self-worth, based on a tenuous resources *boom* that has the capacity to go *bust* at any point in the near future (especially if China trips over the sprawled US economy). I guess overseas players might just be seeing that scenario as a tad risky too...??


AJ

 

[dhukka]

Oh goody, another "why is reality not doing what I want it to do?" thread. The S&P500 fell 50% during the last bear market, the Australian market less than half that.

Maybe currencies have something to do with it? The S&P500 is down 19%, however in Euro terms it's down 25%

 

[scuffler]

Now i am not sure if its true or not but maybe the Aussies borrow too much and hence the bigger sell off???

If anyone knows me i am a pommie bloke...i never borrow for shares...never have done, never will do.
Its all my own cash.....

So in a nutshell all u foster drinking ,kangaroo lovers are just no good with your cash,lol.

:whip:whip

 

[MRC & Co]

So in a nutshell all u foster drinking

Foster drinking?

 

[Trembling Hand]

So in a nutshell all u foster drinking ,kangaroo lovers are just no good with your cash,lol.

The only people that drink Fosters are the Poms. :

 

[wayneL]

The only people that drink Fosters are the Poms. :

Haha! A source of hilarity for me over here, they all presume I swill Fosters by the gallon. The look on their face when I say "Aussies don't drink that ****" is priceless.

At least one belly laugh a week so far.

 

[korrupt_1]

As Mofra stated, local markets have a good size of foreign investment. When the US, Asia or Europe crashes, it's easier to liquidate AU stocks to cover losses on the other stock markets...

You can almost see(hear) what happens in those fund manager's meeting rooms... "Right guys, we're taking a beating on the US markets, what can we liqudate to cover those losses?"... "Erm, the Aussie market perhaps?".. " Right, you guys know the drill... dump those Aussies stocks and get some cash quick!"

* I have really no idea... but that's just a hypothesis?

 

[Temjin]

Now i am not sure if its true or not but maybe the Aussies borrow too much and hence the bigger sell off???

I tend to have the same view too, Aussies share tend to be brought with more "leverage" through margin lending than the US shares, relatively speaking anyway. Don't have numbers to back up though.

 

[noirua]

The Aussie Dollar has been very strong against the Greenback and may now look expensive, and thus a withdrawal of funds. There has been a substantial withdrawal by British investors with the Aussie down about 5% in a week.
Signs of Aussie Banking problems and talk of some keeping quiet over losses, has also hurt the market.
Some now feel that rises in interest rates have come to an end and a reversal now looks the order of the day.

 

[powerkoala]

The Aussie Dollar has been very strong against the Greenback and may now look expensive, and thus a withdrawal of funds. There has been a substantial withdrawal by British investors with the Aussie down about 5% in a week.
Signs of Aussie Banking problems and talk of some keeping quiet over losses, has also hurt the market.
Some now feel that rises in interest rates have come to an end and a reversal now looks the order of the day.

was thinking about reversal the other day. but now, i am afraid whether there will not be any good news left. xao really tumbles to the lowest when the first panic sell-off started. currently drifting slowly to the pit. hope the pit got bottom though.

 

[nioka]

Now i am not sure if its true or not but maybe the Aussies borrow too much and hence the bigger sell off???

If anyone knows me i am a pommie bloke...i never borrow for shares...never have done, never will do.
Its all my own cash.....

So in a nutshell all u foster drinking ,kangaroo lovers are just no good with your cash,lol.

:whip:whip

You are probably right about the borrowing. You are wrong about Fosters and ,as an aussie, i've probably shot more Kangaroos than you have ever seen. Kangaroos are a pest in many places.

 

[Bill M]

Thanks for the responses everyone, seems like there are many reasons and put them all together and we got a bigger dive. My mate and I often scratch our heads over this one that's why I asked here, thanks again.

Hey scuffler, as a pretty good beer drinker I can say I haven't seen Fosters on tap anywhere in the past few years, come to think of it I don't see it in bottle shops anymore either, cheers mate.:alcohol:

 

[yonnie]

hasn`t the australian market gone up faster than the US market?

might be it will come down faster as well.