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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
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.
+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....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...
Have a look at this.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?
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.)
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.
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%.
That is, foreign persons collectively cannot control more that 35 per cent of the non-Commonwealth owned Telstra shares
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.
Why the snide comment? I thought most of the replies were helpful.
Why would the yield trade unwind ?
The dollar dude...
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.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?
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.
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.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?
Could I be any more clearer and concise?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.
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.
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.
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.See the difference, V?
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.
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.
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.
rather an appreciation of people (Coolcup and Sammy, plus Knobby) who took the trouble to actually answer Mr Burns' original question.
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.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.
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.
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.
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.Not sure how 'cryptic' is harsh. If someone just says "the dollar, dude", as an example, seems pretty cryptic to me.
correlation between the dollar, foreign investors and the effect on share prices on the ASX.
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