WBC - Westpac Banking Corporation

[nulla nulla]

Westpac got hit hardest of all the banks and the interday low of $21.05 was the lowest it has been this year. If this is the start of the second "dip" I am in big trouble If it is a correction with any hope of a rebound then I am not in trouble .

I am giving it another 2 weeks to play out. If it is still in the red come 30 June I will close out the losses to offset capital gains (then probably go back in for any rebound).

 

[alexandro]

I am also heavy WBC and sitting on a 30k loss. We need to get rid of June quickly and go into July. Sun should start to shine again. Should be ok since ASX200 closed above key support on friday (4477). The indicators looked good there for a day or two last week, but then turned away. Just need DOW and All Ords to finish going down and start going up. Your idea of allowing 2 weeks for things to play out is a good one and should give enough time for things to turn better. If ASX200 is under 5000 by 30 December, it will be undervalued. So between now and end of year, I feel ASX200 has 400-500 points to gain. This will lift WBC back to at least 23 (conservative). We may also get 23+ in 4 weeks. WBC is like a coiled spring right now, a few hundred points gain on DOW overnight and ASX200 (with an plan for Greece proposed, and minute good USA data) should make it put on a buck or two. With hindsight, we will look back at this mid-year period on the charts and say "look at that, thats when we should have pushed it all in". June needs to finish.

 

[nulla nulla]

I locked in a modest profit yesterday at $22.18 (on a parcel purchased at $21.35) then watched the price spike to $22.32. Picking bottoms and tops is to elusive for me. Happy to have a profit.

Was hoping to unload another parcel (purchased at $21.61) today at $22.31 but didn't have the sale in and the share price dipped soon after open and never looked like comming back.

WBC seems to get hit hardest of the banks when there is any sort of retrace, probably something to do with St Georges's exposure to NSW mortgages. That and the hedge funds still expecting Australia to have a real-estate bubble burst like the yanks did. Stupid buggers don't realize we don't have the exposure to "ninja" property loans like they did. Still, makes for swings with entry/exit prices providing opportunities for quick trades.



Good to see the flurry of buyers come in at the auction lifting the close back above $22.00. Maybe there is hope yet.

 

[nulla nulla]

Westpac appears to have closed at the top of a new resistance point. It will be interesting to see if the market decides it should break out from here and climb to $23.00+ or whether it should get sold off back down to the low $21.00's.

 

[Garpal Gumnut]

Thanks nulla,

I've been watching WBC meself, and agree with your analysis.

The only thing that concerns me is the decreasing volume over the last two weeks or more on this increase in price.

The oversold rsi when price has trended sideways as usual shows good correlation with a break upwards, not present atm, although the price has trended up, which could explain this.

I do hate fundamentals, but has the danger been priced in to banks, or will they trade sideways for a year or more?

Monday will assist. I may buy if it rises but if it falls I'll be looking like you at low 21's which shows good support.

gg

 

[nulla nulla]

The only thing that concerns me is the decreasing volume over the last two weeks or more on this increase in price.

I suspect this may be because a lot of Australian investors are sitting on the side lines waiting for the Carbon Tax fallout to settle.

The oversold rsi when price has trended sideways as usual shows good correlation with a break upwards, not present atm, although the price has trended up, which could explain this.

There was speculation several weeks ago that Overseas Hedge funds are shorting Australian Banks relative to their mortgage exposure on the Eastern Coast. Westpac having the highest exposure through the combo of Westpac and St George.

The basis of this being the expectation that our housing prices are inflated and the bubble will burst as did the u.s.a. notwithstanding that the u.s.a market was built on "ninja" loans and their banks did not have the same degree of regulation and management standards as ours.

This could be causing a problem to the shorters in that having pushed the price down, local investers come in on the basis of TA/FA for the yield, franking and lower price earnings ratio. This appears to put a floor under the price in the low $21.00 area. Obviously the shorters are also able to soak up shares at the lower levels and even turn small amounts of shares back into buying encouraging the price up to the point they start shorting again. Reverse swing trading perhaps?

I do hate fundamentals, but has the danger been priced in to banks, or will they trade sideways for a year or more?

Personally I think we are going to see sideways trading in Australia for some time to come and not just in banks. Australia is pretty much ripe for the picking by international hedge funds and perhaps foreign governments.

Monday will assist. I may buy if it rises but if it falls I'll be looking like you at low 21's which shows good support.

gg

I'm hopefull of an upward break out but cashed up to come back in if it tests the low $21.00's. As always this post is an opinion only and not a recommendation. Readers should do their own research etc.

 

[nulla nulla]

I thought our market would test lower levels today and wbc would be under $21.00.

The low for the day was $21.12 (twice, double bounce?) then before the close it clawed it's way back up to $21.23. However in the auction it was pushed back down to close on $21.14, same as yesterdays close.

Can't work out if it is because of exposure to Italy, Carbon Tax or Property Prices going to fall?

 

[Julia]

Can't work out if it is because of exposure to Italy, Carbon Tax or Property Prices going to fall?

Presumably a mixture of the local falling confidence levels due to government incompetence, reinforced by the 'details' of the carbon tax, along with the utter mess in Europe and the possibility that if the US doesn't get it together before 2 August, they will default on their debt.

Quite enough, all up, to cause a loss of confidence, I'd have thought!

 

[nulla nulla]

Presumably a mixture of the local falling confidence levels due to government incompetence, reinforced by the 'details' of the carbon tax, along with the utter mess in Europe and the possibility that if the US doesn't get it together before 2 August, they will default on their debt.

Quite enough, all up, to cause a loss of confidence, I'd have thought!

Nah..I don't think it is Government competence or lack there-of or the carbon tax details. I think it is a combo of:

1. Reliance (although low) on a component of overseas funding for local mortgages which will get more expensive if there is a default;
2. Having bought Italion and other European governement bonds; and
3. The overseas hedge funds still trying to short our banks down in anticipation of a Australia property price collapse.

All overated and presenting investors/traders with competitive entry points, imo. As always do your own research.

 

[nulla nulla]

It goes up on "irrational exuberance" and down on "irrational fear" and plunges on panic. Today someone hit the panic button. All the banks took a hit but wbc seemed to take a bigger hit then the other majors.

In the afternoon there was a lot of support in the range $20.62 - $20.68 with the clawing back to $20.74 then jumping back to $20.77 in the auction but the mood is definitely negative.

Todays interday low at $20.61 was lower than the interday low of $20.73 on 1 July 2010 although todays closing price was higher. If it can't rebound from here the next support level goes back to the interday low of $19.60 on 23 July 2009.

Life jackets on and buckets and pumps at the ready in case we take on more water.

 

[blue0810]

If hedge fund are shorting Australian banks. Well I’m joining them. Too late ..Not sure

 

[nulla nulla]

Financial stocks took another battering today (except McQuarrie Bank) and the fear mongering and sell down continues.



Watching closely for the first signs of stability on the international scene (Italy) for a viable re-entry point. Also being cautious that this may be the continuation of a longer term sideways and downward trend. I'd like to think things are not so bad as they were during the implosion of the gfc.

 

[blue0810]

This week all banks in Red:

-5.20 ANZ
-5.41 CBA
-7,00 NAB
-7.66 WBC
-7.02 BOQ
-3.06 BEN
-6.32 MQG

 

[Julia]

Financial stocks took another battering today (except McQuarrie Bank) and the fear mongering and sell down continues.

Why are you calling it fear mongering? The fear is quite justified, so it doesn't constitute 'fear mongering' which supposes an artificially and unrealistically based fear.

PS try Macquarie Bank Australia

 

[notting]

Banks are really being overly talked down at present. It's an advantage being an Ausi because we don't have to worry about the currency height with respect to stock decisions. We can buy em at these great levels and sit back, take the franked dividends and wait for the sun to come out. It will. If the best banks in the world don't get back up life will not be worth living anyway so what the hell!!

 

[nulla nulla]

Why are you calling it fear mongering? The fear is quite justified, so it doesn't constitute 'fear mongering' which supposes an artificially and unrealistically based fear.

PS try Macquarie Bank Australia

I respect your right to your opinion and your right to express your opinion, after all Australia is still a democracy. Also I thank you for the spelling lesson.

 

[nulla nulla]

Banks are really being overly talked down at present. It's an advantage being an Ausi because we don't have to worry about the currency height with respect to stock decisions. We can buy em at these great levels and sit back, take the franked dividends and wait for the sun to come out. It will. If the best banks in the world don't get back up life will not be worth living anyway so what the hell!!

Having read many articles and listened to several economist in the media discussing the strengths and weaknesses of the Australian banks versus the international banks (not just wbc) I would have to say most of them are supportive of our banks. Nothwithstanding they have confirmed that Australian banks have an exposure to Italian Government Bonds. This is possibly linked to their sourcing credit from the European banks that the Aussie banks need to have European Government Bonds as security for the lines of credit.

The Ratings agencies like Moodies; Standard and Poor and; Fitches down graded Australian Banks (which the banks duly reported to the ASX as required under the disclosure laws). The down grade was on the basis that:
1. Australian Banks source funds from Europe to finance their mortgage books (which could get more expensive or difficult to get if a default in Greece etc occured);
2. Australian Real Estate prices are at inflated levels:
3. That the property price bubble is about to burst, causing a collapse of our real estate market like that which occured in the u.s.a.; and
4. Our banks will have exposure to losses due to defaulting martgagees.

The reality is that aussie banks have been sourcing funds from Europe for over 19 years to finance mortgages, it is not something new. Also, since the gfc, aussie banks have significantly reduced their reliance on overseas banks for funding, being able to access funds from increased savings pools of aussie customers as well as being able to tap bond markets arround the world.

Australia doesn't have the "ninja" problem the u.s.a. had. Our unemployment is below 5% and the mortgage default situation in Australia is minimal. In some areas residential prices are dropping but in others they are holding or continuing to increase. If there is a bubble the pop will have minimal impact across Australia (except maybe the Gold Coast and Sunshine Coast in Qld).

Foreign hedge funds talking down our banks and real estate, simply demonstrates their lack of knowledge of the Australian economy. While the hedge funds have the financial resources to push prices down, eventually they will wake up to the fact that Australia is not about to have a depression. If things got really bad here the RBA would step in to assist the local banks and the goverment will guarantee the major banks. Glen Stevens has already said as much.

The push down does provide entry opportunities for investors prepared to take a long term view, benefiting in the short term from dividends and franking credits while yields are at 8% plus and benefiting in the long term from capitial gains when things return to normal.

IMO It is unlikely that the Euro member countries will let Italy go to the wall. However while they dicker about what they can do, the markets will probablt jump up and down like it did when the Euro members dickered about Greece. This could provided trading opportunities for the stout hearted. As always do your own research and good luck.

I apologise in advance for any spelling errors in this post.

 

[Julia]

I apologise in advance for any spelling errors in this post.

Couldn't find any this time, nulla, just a few typos.
Probably was a bit cranky of me to point out the spelling for Macquarie.

 

[nulla nulla]

There is another article in the Saturday Sydney Morning Herald worth a mention, the prediction by the westpac economist Bill Evans, of a 1% interest rate fall over the next 12 months.

Here is the link...

http://www.smh.com.au/business/westpac-rates-to-fall-1-20110715-1hi9s.html


A significant perspective in his reasoning is..."Interest rates were ''too high'' given the weakness in non-mining parts of the economy, according to the chief economist at Westpac, Bill Evans, who predicted the Reserve would deliver moribund consumers a cut of one quarter of a percentage point at its December meeting. Further three-month instalments of 0.25 percentage point cuts would follow, he predicted. ''While the catalyst for the first rate cut is likely to come from offshore, we do not expect it to be a one-off,'' he said. ''Interest rates are too high in Australia given the state of the non-mining sectors of the domestic economy and a downward adjustment is required to avert a damaging round of contraction.''

(My bold) It could be interpreted as "Things are going to get worse before they get better". Next week (and possibly the next few months) will be very interesting.

Read more: http://www.smh.com.au/business/westpac-rates-to-fall-1-20110715-1hi9s.html#ixzz1SFvUT01K

 

[alexandro]

During the early recovery from the GFC (April/May 2009), these current levels (20.50) acted as resistance and it could not break above it and into 21’s until late July 2009. Last years early July rebound came from support at 20.56 level. So seems the roughly 20.50 level is resistance turned support and we are right on support now. It should be a rebound from here of some size, small or large. If no rebound from here, then fears about Australian housing and falls in Australian banks are real and coming, in which case WBC will go under 20 and potentially 17.50 (could even do a revisit of GFC lows depending on severity of panic). I can’t see it go under 20 or can’t see it yet. If WBC rebounds from here and never comes back under these levels, then this was all fear and panic and there was no Australian housing bubble and banks at these prices were a bargain. Use your instincts.
The 50% fall in Australian bank stocks during the GFC was for what reason? Profits didn’t fall that much. Australian housing didn’t fall that much. So it was fear and panic, artificial and unrealistic based. The same could be happening right now.