TLS - Telstra Corporation

[MrBurns]

Unfortunately some are so blind that even when trying to explain something as its unfolding they cannot see their own nose let alone an up coming disaster. You are left trying to prompt sensible consideration and in return end up have to do this.

Well there's an example above of how to talk to people then again the web does distort things , while you're being as nice as pie it might come across as something else.............move on

 

[qldfrog]

My sense of it is that global investors piled into our market through the course of late 2012 / early 2013 chasing the larger liquid stocks with earnings certainty. These also happened to be the stocks that provided good yields (others went up too, like CSL Ramsay, etc). Basically anything with a degree of earnings certainty got pushed up.

Now, these offshore investors are benchmarked against global indices which are measured in US dollars. Their outperformance is measured every quarter (and bonuses are paid off the back of that, but don't go there). As long as these investors are "market weight" to Australia, they don't really care because the performance of the Aussie market (in A$ and US$) doesn't impact their outperformance / underperformance because they are tracking along at market weight. The problem was that with the amount of money they put to work in the last 6 months in Australia, coupled with the sharemarket rally the larger stocks had - this all meant they ended up overweight to Australian stocks. As the currency came off, this impacted their US dollar returns and Australia started to be a source of underperformance for their portfolio. They simply hit the sell button and left. There was not enough liquidity around to catch the sudden supply of stock. Most domestic managers are at the minimum level of cash allocation at present. When the offshore funds hit sell, they are usually only in the larger stocks and these have been smashed (including TLS).

+1 this is my understanding of the situation, foeign investment (ie 50% of asx if I remember we00) leaves to avoid the effect of AUD collapse, share fall, more leaving, we are on a slide....
mostly affcet ASX20 but contagious so...

 

[Bintang]

+1 this is my understanding of the situation, foeign investment (ie 50% of asx if I remember we00) leaves to avoid the effect of AUD collapse, share fall, more leaving, we are on a slide....
mostly affcet ASX20 but contagious so...

I think there is still a Government imposed limit on the aggregate foreign ownership of Telstra - either 30% or 35%
Not sure how this is enforced and I don't know how the average investor has any way of knowing what the level is at any particular time. (If anyone knows the answers to this I would love to hear about it.)

Anyway if the average foreign ownership on the ASX is 50% and if I am correct about there being a limit on TLS one might surmise that the impact on Telstra of foreign capital fleeing from Australia should be less than the market average.
I've seen stated that some ASX resource stocks have as much as 70% foreign ownership. Again it would be nice if the average punter could get access to data like this for individual companies. Does anyone here know where to find it outside of a professional broking service?

 

[Ves]

I think there is still a Government imposed limit on the aggregate foreign ownership of Telstra - either 30% or 35%
Not sure how this is enforced and I don't know how the average investor has any way of knowing what the level is at any particular time. (If anyone knows the answers to this I would love to hear about it.)

Have a look at this.

Section 8.1 in particular.

http://www.telstra.com.au/abouttels.../foreignownershipregulations-november2006.pdf

Is this what you are looking for?

 

[Bintang]

Have a look at this.

Section 8.1 in particular.

http://www.telstra.com.au/abouttels.../foreignownershipregulations-november2006.pdf

Is this what you are looking for?

Thanks.
Confirms there is a 35% limit - assuming the regulations are still current? (I notice it dates from 2006)

 

[McLovin]

I think there is still a Government imposed limit on the aggregate foreign ownership of Telstra - either 30% or 35%
Not sure how this is enforced and I don't know how the average investor has any way of knowing what the level is at any particular time. (If anyone knows the answers to this I would love to hear about it.)

Here you go...Straight off their website.

Telstra estimates that as at 31 May 2013, the number of Telstra shares recorded as foreign on the Telstra register was 22.97 percent of the total number of issued Telstra shares.

http://www.telstra.com.au/abouttelstra/investor/my-shareholding/faqs/index.htm?faqid=61

The wording in the The Telstra Corporation Act I read as being a group (ie related parties acting together) of foreigners cannot control more than 35%, rather than an upper limit of all foreign ownership being 35%.

For the purposes of this Act, an unacceptable foreign-ownership situation exists in relation to Telstra if:

(a) there is a group of foreign persons who hold, in total, a particular type of stake in Telstra of more than 35%; or

(b) there is or are one or more foreign persons each of whom holds a particular type of stake in Telstra of more than 5%.

However the TLS website says my interpretation is wrong. In which case the use of the word "group" in (a) is redundant.

That is, foreign persons collectively cannot control more that 35 per cent of the non-Commonwealth owned Telstra shares

 

[Bintang]

Here you go...Straight off their website.



http://www.telstra.com.au/abouttelstra/investor/my-shareholding/faqs/index.htm?faqid=61

The wording in the The Telstra Corporation Act I read as being a group (ie related parties acting together) of foreigners cannot control more than 35%, rather than an upper limit of all foreign ownership being 35%.



However the TLS website says my interpretation is wrong. In which case the use of the word "group" in (a) is redundant.

Thanks. You found all of that amazingly quickly.

 

[Bintang]

I'm quite surprised by the foreign ownership level of 23%. Assumed it would be up close to the limit.
Anyway it also suggests to me that TLS should see a relatively smaller impact from fleeing foreign capital than say for example resource stocks.

 

[Julia]

Why the snide comment? I thought most of the replies were helpful.

From Mr Burns:

Why would the yield trade unwind ?

From Canoz:

The dollar dude...

Why would the dollar fall?
And I pre-ask why on the next 6 layers of explanations.

A bit like peeling an onion, isn't it?

It was not a snide question, rather an appreciation of people (Coolcup and Sammy, plus Knobby) who took the trouble to actually answer Mr Burns' original question.

People don't set out to look foolish by asking questions that they don't actually want an answer to. Neither do they enjoy the answers that I described as cryptic, seemingly designed not to inform but rather to make the respondent look superior.

This sort of stuff happens all the time. Mostly we don't comment on it. But it seems a pity to me that people come to forums in good faith, being prepared to ask about what they don't understand, and are belittled in response. Perhaps that's just the nature of a stock forum. I don't know. It just seems to me that it's a phenomenon which is increasing lately and will definitely deter people from asking questions.

My sense of it is that global investors piled into our market through the course of late 2012 / early 2013 chasing the larger liquid stocks with earnings certainty. These also happened to be the stocks that provided good yields (others went up too, like CSL Ramsay, etc). Basically anything with a degree of earnings certainty got pushed up.

Now, these offshore investors are benchmarked against global indices which are measured in US dollars. Their outperformance is measured every quarter (and bonuses are paid off the back of that, but don't go there). As long as these investors are "market weight" to Australia, they don't really care because the performance of the Aussie market (in A$ and US$) doesn't impact their outperformance / underperformance because they are tracking along at market weight. The problem was that with the amount of money they put to work in the last 6 months in Australia, coupled with the sharemarket rally the larger stocks had - this all meant they ended up overweight to Australian stocks. As the currency came off, this impacted their US dollar returns and Australia started to be a source of underperformance for their portfolio. They simply hit the sell button and left. There was not enough liquidity around to catch the sudden supply of stock. Most domestic managers are at the minimum level of cash allocation at present. When the offshore funds hit sell, they are usually only in the larger stocks and these have been smashed (including TLS).

Yield is still sought, just not as many will try achieve their returns through Telstra. Hence there will be less demand.

Theoretically, more domestic money will move out of stocks and into property.

Growth stocks which have been hampered by the historically high AUD should get more attention now.

People will start positioning their investment for an interest rate rise and subsequent dollar appreciation in USD.

The AUD is no longer supported by higher relative interest rates and this depreciates the AUD- like what we're seeing now. What do you think that does to the value of TLS shares held by international investors?

Simple economic theory. The yield play has been on, and easier to spot given the presence of QE. But it always had to come to an end.

TLS might bounce from here, and the chart still looks healthy, but I'm fairly certain the trend has nearly run its course and we won't see prices much higher than $5.

See the difference, V? A clear explanation for which Mr Burns expressed his appreciation. I, and perhaps Rick, also had our understanding improved.

Unfortunately some are so blind that even when trying to explain something as its unfolding they cannot see their own nose let alone an up coming disaster. You are left trying to prompt sensible consideration and in return end up have to do this.

Really? We all come with diverse backgrounds and experience. Some may have made money others can only imagine via property development and investment, for example, yet have minimal experience of global markets, currency etc. You may have extraordinary expertise in trading, I don't know. But I'm just puzzled as to why you and others are so impatient with people who are quite clearly asking for help in understanding.

Maybe if it's so irritating, just don't comment at all, rather than feel obliged to decry others' lack of understanding at a level you approve of.

I don't mean to be antagonistic or inflammatory toward anyone. I just don't understand why there is this apparent need to embarrass others. Sorry if I've expressed it poorly, and apologies also for - in answering Ves's question - I've further contributed to the thread going somewhat off track.

 

[Trembling Hand]

Really?

Well look at this from me trying to explain what was happening on the 25th

Its not odd to think that the yield has reached a point where the risk to reward doesn't favour more inflows in the same direction, especially carry trade type trades as the AUD takes it in the neck and capital is at risk. My point being that you are blind to why capital is flowing out of what has been a one way trade for some time because you have such a stake in it to keep going in said straight line.

Could I be any more clearer and concise?

To get this,

Wrong again, I pretty we'll couldn't give a rats I'm well in profit and wouldn't be selling anyway for tax reasons, but I was curious on the interest rate front.
You are way too presumptious about people's motives and circumstances.

to then try this,

Just one point. You couldn't give a rats that the people that created the trend that you have road so nicely are possibly now doing the opposite.

Cool.

Bottom line is I'll leave you all to it. It seems you guys want eternal patience and good grace while kicking the **** out of any frustration that build from telling fools the obvious.

So in an attempt to not scare away any more newbies I'll leave this place to the wiser.

 

[Ves]

See the difference, V?

Julia, I do see where you are coming from... but as soon as skc said "yield trade unwinding" I just googled it and found the answer myself.

It's really hard having the knowledge sometimes, we often assume that other's share that knowledge and that a few words, or a finger in the right direction is good enough. I do it all the time, I accidently forget that other's may not know what all the terminology stands for on the same level as myself.

I think it was a bit harsh that you called the responses cryptic. Perhaps it is just the wording, your point was probably justified.

 

[Bintang]

We all come with diverse backgrounds and experience. Some may have made money others can only imagine via property development and investment, for example, yet have minimal experience of global markets, currency etc. You may have extraordinary expertise in trading, I don't know. But I'm just puzzled as to why you and others are so impatient with people who are quite clearly asking for help in understanding.

Maybe if it's so irritating, just don't comment at all, rather than feel obliged to decry others' lack of understanding at a level you approve of.

I don't mean to be antagonistic or inflammatory toward anyone. I just don't understand why there is this apparent need to embarrass others. Sorry if I've expressed it poorly, and apologies also for - in answering Ves's question - I've further contributed to the thread going somewhat off track.

Julia, I agree with you wholeheartedly.
Its also disappointing when good discussion gets hijacked by these petty diversions and anyone trying to learn or share something misses out.

 

[MrBurns]

Well look at this from me trying to explain what was happening on the 25th


Could I be any more clearer and concise?
To get this,
to then try this,
Bottom line is I'll leave you all to it. It seems you guys want eternal patience and good grace while kicking the **** out of any frustration that build from telling fools the obvious.
So in an attempt to not scare away any more newbies I'll leave this place to the wiser.

Your comment was condescending hence my reply, also my comment that I was holding pertained to the situation at that time, when it started to fall and continued to do so I bailed just in case there was a sudden and unexpected fall.......I had quite a lot in there, now I've had enough of this, moving on..........

 

[coolcup]

I'm quite surprised by the foreign ownership level of 23%. Assumed it would be up close to the limit.
Anyway it also suggests to me that TLS should see a relatively smaller impact from fleeing foreign capital than say for example resource stocks.

This is a logical conclusion. However, trading activity is more dependent on the composition of the activity during the day rather than the % of the register. If foreign ownership is only 23%, I would bet this is a fairly overweight position to TLS from global investors in the context of global allocations. Let's say 10% overweight (not based on any science, just illustrative). If they wanted to move to a market weight position, then that 10% of the stock is suddenly available for sale. It then depends on how liquid the stock is (ie how much of it trades every day / week / month) to determine whether the general trading activity can handle such a large influx of stock. My view is that in the short term it could not which is what has driven the prices down. Just like over the past 6 months when the offshore money was flooding in, the daily volume could not provide enough supply which drove prices up.

 

[coolcup]

rather an appreciation of people (Coolcup and Sammy, plus Knobby) who took the trouble to actually answer Mr Burns' original question.

Thank you Julia!

 

[Julia]

Julia, I do see where you are coming from... but as soon as skc said "yield trade unwinding" I just googled it and found the answer myself.

Sure. Probably my first option also with stuff I want to find out about. But I suppose a stock forum seems a reasonable source of information.

I think it was a bit harsh that you called the responses cryptic. Perhaps it is just the wording, your point was probably justified.

cryp·tic
/ˈkriptik/
Adjective

Having a meaning that is mysterious or obscure.

Not sure how 'cryptic' is harsh. If someone just says "the dollar, dude", as an example, seems pretty cryptic to me.

Anyway perhaps I'm being unreasonable. Forums are not designed as nurseries, and I take TH's point in this respect.

Back to TLS: Being still essentially in cash, I decided to do a small experiment with a purely yield intent.
My main priority has always been capital preservation and I've always disagreed with those who have said "don't worry about what's happening with your capital if your aim was the grossed up yield"
Fairly obviously in a significant downturn your yield isn't going to go anywhere near making up for the capital loss, even if this is unrealised.

So, taking only about 2% of available investable capital, this went into TLS and NAB.
Usually I'd have been out of both several days ago, but sticking with the 'plan' I've resisted the compulsion to exit.
It doesn't worry me with such a relatively small amount, but I'm more than ever convinced that this is for me absolutely not a viable approach with bigger amounts. I'm really uncomfortable with the diminution of my capital and don't know how others routinely take this approach.

 

[McLovin]

Sure. Probably my first option also with stuff I want to find out about. But I suppose a stock forum seems a reasonable source of information.

I agree, but I think the point of this forum is on assisted self-educating rather than just asking other posters for their opinion. Afterall, if you have no idea what you're doing and don't really have any interest in trying to apply some sort of strategy, the safer option is either bank deposits/index funds/something else that requires minimal input.

 

[Ves]

Not sure how 'cryptic' is harsh. If someone just says "the dollar, dude", as an example, seems pretty cryptic to me.

No, that isn't a cryptic response. It just shows that Burnsy (and probably yourself as you didn't answer the original question either) don't understand the correlation between the dollar, foreign investors and the effect on share prices on the ASX. This concept is not mysterious or obscure at all. Lots of things may seem cryptic if you do not have the knowledge base to understand them.

The catch 22 of forums: someone replies and doesn't understand and takes offense but if someone does not reply someone else cries foul that no one helps.

Take a step back, apart from the silly stuff over Mr Burns and the argument over his trade (whether it was a loss or not) there has been absolutely nothing wrong with the participation in this thread. It is rare to see a "blup chip" on this forum with so much quality input from a wide range of posters.

People like TH will stop contributing if you keep complaining about minor things like this.

 

[CanOz]

Wow, i just caught up with this thread today...i had no idea my short comment caused such a stir...my apologies. I was actually in the middle of something when i popped that answer in there to Burnsy, thinking he would understand my hint was to alert him to the AUD unwind...Didn't mean to cause any issues or come across as cryptic, i just wanted to answer him and only had a second or two. I guess i should have let someone else answer that had the time to explain properly..

Now i realize why Burnsy thanked me for explaining something clearer on another thread, i thought that was kind of strange at the time.


Cheers,


CanOz

 

[CanOz]

correlation between the dollar, foreign investors and the effect on share prices on the ASX.

Actually this was the only reason i was even interested in the thread as comments from Prop Traders regarding carry trades interest me greatly as there is allot for me to learn in this area...in fact i was only able to respond to Burnsy from what i had learned a few posts back from TH's comment. It had not occurred to me that unwinding of foreign positions in Telstra after the dollar collapsed was the cause of the drop in the price....

CanOz