The ASX to plummet 132 points today?
- Thread starter Realist
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Article from Mining news on the resource stocks falling this morning. Couldnt agree more with their views.
The carnage was sparked by a 9% fall in the value of the Shanghai Composite Index, which $140 billion in value in its biggest single-day fall in a decade, largely on the back of rumours that the government would introduce a capital gains tax. Adding to the uncertainty in Shanghai was news that the Chinese government had approved a special task force to clamp down on illegal share offerings and investments with borrowed money.
That triggered a fall of 3.3% on the Dow Jones index and a slide of 3.5% in the Nasdaq Composite index.
Those leads sparked panicked selling across the Australian Stock Exchange, and in resource equities in particular.
Many of Australia's largest miners have recorded drops in excess of 10%, and only seven of the 494 mining and exploration companies on MiningNews.net's resources watchlist had managed gains.
However, there were signs at the time of writing that the market was beginning to settle down, with many stocks starting to make up the losses as bargain hunters moved in.
Hartleys resources analyst Andrew Muir told MiningNews.net that the panic was a knee-jerk reaction.
"The thing to note is that the fundamentals haven't changed for most, if not all, companies," Muir said.
"It might not be a bad time to start looking for some bargains."
Muir pointed to nickel stocks in particular, given that the price of nickel rose yet again overnight to another all-time record. The stainless steel additive closed at more than $US45,000 per tonne on the London Metal Exchange overnight.
Macquarie Equities, meanwhile, was advising its clients to relax.
"This event does not change fundamental company values but it will spook those who were not already advocating that the market had run too hard. The shake out also coincides with the end of reporting season tomorrow which could see selling in expensive industrials exacerbated. This shake-out will therefore last a few days at least," Maquarie said.
"Bear in mind that exaggerated falls will only prompt private equity to the table so that will also put a floor under industrials. Any excessive positions not already trimmed should be scaled back and cash that has been accumulated over the last few weeks should then be used to buy resources and any value that emerges in stocks that were previously regarded as expensive."
That "stay calm" sentiment was echoed in comments from Commonwealth Securities chief equities economist Craig James, who spoke to Dow Jones Newswires.
"It is a fear-driven market but the good news is that nothing has changed in terms of the fundamentals," James said.
"It wasn't fundamentals that drove the Chinese market down but rumours, so this is not a case for panicking for any investor," he added.
The carnage was sparked by a 9% fall in the value of the Shanghai Composite Index, which $140 billion in value in its biggest single-day fall in a decade, largely on the back of rumours that the government would introduce a capital gains tax. Adding to the uncertainty in Shanghai was news that the Chinese government had approved a special task force to clamp down on illegal share offerings and investments with borrowed money.
That triggered a fall of 3.3% on the Dow Jones index and a slide of 3.5% in the Nasdaq Composite index.
Those leads sparked panicked selling across the Australian Stock Exchange, and in resource equities in particular.
Many of Australia's largest miners have recorded drops in excess of 10%, and only seven of the 494 mining and exploration companies on MiningNews.net's resources watchlist had managed gains.
However, there were signs at the time of writing that the market was beginning to settle down, with many stocks starting to make up the losses as bargain hunters moved in.
Hartleys resources analyst Andrew Muir told MiningNews.net that the panic was a knee-jerk reaction.
"The thing to note is that the fundamentals haven't changed for most, if not all, companies," Muir said.
"It might not be a bad time to start looking for some bargains."
Muir pointed to nickel stocks in particular, given that the price of nickel rose yet again overnight to another all-time record. The stainless steel additive closed at more than $US45,000 per tonne on the London Metal Exchange overnight.
Macquarie Equities, meanwhile, was advising its clients to relax.
"This event does not change fundamental company values but it will spook those who were not already advocating that the market had run too hard. The shake out also coincides with the end of reporting season tomorrow which could see selling in expensive industrials exacerbated. This shake-out will therefore last a few days at least," Maquarie said.
"Bear in mind that exaggerated falls will only prompt private equity to the table so that will also put a floor under industrials. Any excessive positions not already trimmed should be scaled back and cash that has been accumulated over the last few weeks should then be used to buy resources and any value that emerges in stocks that were previously regarded as expensive."
That "stay calm" sentiment was echoed in comments from Commonwealth Securities chief equities economist Craig James, who spoke to Dow Jones Newswires.
"It is a fear-driven market but the good news is that nothing has changed in terms of the fundamentals," James said.
"It wasn't fundamentals that drove the Chinese market down but rumours, so this is not a case for panicking for any investor," he added.
CanOz
Home runs feel good, but base hits pay bills!
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CanOz said:
160 points in one day....biggest drop in how long?
And some people think this could be the worse??????
Hmmmm?
Cheers, :twak:
KIWIKARLOS said:
Makes you want to sell your house below market and put all the sales cash on the stock market!
GLOBAL MARKETS-Asian stocks skid after China, Wall St slides
Wednesday, February 28, 2007 2:19:30 AM
http://www.reuters.com
Perhaps the most remarkable sign of the recent irrational exuberance underpinning China's stock markets is that during the past year, when a company has announced bad news, its stock price has been shooting through the roof.
Early this year, for instance, when a group of 17 Chinese companies was cited by regulators for misappropriating corporate funds, their stock prices all skyrocketed. When the Tianjin Global Magnetic Card Company failed to report quarterly earnings last April, its stock doubled.
With shares in Shanghai tumbling, stocks listed in Shenzhen also collapsed, falling 9.3 percent. In Hong Kong, the benchmark Hang Seng Index fell 1.76 percent, and in Japan, the Nikkei dropped about half a percent to 18,119.92.
But none of the world's major stock markets has been as volatile as in China, where people refer to the stock market as "dubo ji," or the slot machine. The gyrations have become almost commonplace for a stock market that suffered through a five-year depression until 2006, when it rose more than 130 percent, the world's best performance.
The Chinese government, however, is worried about an exuberance that could produce a bubble and then a crash that could send bankrupt individual investors into the streets in protest.
Percentage wise, it was a fall of just under 3%. After recent strong gains, a correction was bound to take place sooner or later, just the severity took everyone by surprise. The market has still done well overall during the past 2 months or so. I feel that this isn't the end of the bull market even though some people are starting to panic. Those people out there panicking about a 3% fall are better off sticking to property and cash and forget about investing in the market.CanOz said:
DYOR
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