WBC - Westpac Banking Corporation

[ginar]

Its not looking good is it . CBA finish on friday may give a reprieve to the other 3 for a while . under my key of 21.00 , i wouldnt touch it personally .

 

[nulla nulla]

Westpac dropped to $20.50 last Friday and seemed to consolidate there on Monday & Tuesday this week. The share price rallied back above the $21.00 mark, finishing the week at $21.60 (Interday high of $21.74).

The news out of Europe was positive for the rescue of Greece. No doubt the market reads into this the bail out deals will be available for Italy and/or any other Euro member country that needs it. The news out of u.s.a continue to oscilate between good reports from companies like IBM giving hope that the economy is slowly on the mend, to the ongoing congressional battle to have the debt ceiling raised reminding everyone that the u.s.a. economy is stuffed.



It wouldn't surprise me for wbc to test the low $22.00's next week. Balancing that I fully expect the share price to fall again on the slightest rumour of any further fiscal discord in Europe. It is these rises and falls that makes for trading oportunites, mind you the swings can be sudden and a stout heart is a prerequisite.

 

[IrishDigger]

Good on you Ms Kelly -- it takes a Kelly to sort things out.:aus:

Click Here For News Report

 

[ajjack]

Wow! watch the SP take off now.

Cant wait.....

 

[nulla nulla]

Forget about the low $22.00's. With the brinkmanship between the U.S President and the Republican Speaker creating a mexican standoff, the world is getting nervous and pulling it's money out of the share markets, particularly finance sectors. WBC tested $20.54 today, only slightly above last weeks lows of $20.51.

The deadline is 02 August 2011 for the debt ceiling to be raised failing which the u.s.a will be in default. If there isn't a quick compromise things will get worse Friday (tomorow) and Monday, Tuesday, Next week. If they reach a compromise on Tuesday night our time then I expect wbc to jump at least 2% on Wednesday.

If they don't reach a compromise by Tuesday night our time..........well you work it out for yourselves, I'll be down at the red cross looking for a blood transfusion.

 

[alexandro]

Normally a rebound arrives at 2 months or less. When you go through the WBC historical chart, you can see that the most stubborn and problematic decline from peak to trough has lasted 2 months and 3 weeks before a meaningful rebound has occurred. Even in the depths of the GFC, this was the case. A meaningful rebound of a few dollars came after 2 months and 3 weeks or after a time frame comfortably inside of this period. Using this historical behaviour and taking the current fall we are experiencing from late April’s 25.50 to qualify as stubborn and problematic, when we apply 2 months and 3 weeks from late April, we get a bottom being hit at about middle of July. So it suggests the low of 20.50 on 15 July was it. Yesterday’s low was 20.54. So it is possible that the worst for this plunge since April was over on 15 July at 20.50. A proper rebound is now due and should occur. Unless the recent rebound from 20.50 to 21.74 was it.

 

[alexandro]

If there is no more rebound until further falls, then get ready for further fall in Australian banks and financial crisis Australian version- the Australian Housing and Financial Crisis AHFC. WBC will go under 20 and into 19, then down to 17.50. The government of this country should be more delicate at this time and less experimental. They should already have skill and experience in good policy design and be qualified to become government before they are given the job of governing. Not learn these things during. They win the majority vote and they are qualified but really they are not.

 

[alexandro]

Naturally, you want to land safely if there is a problem mid-air. I think we would all want a talented more experienced pilot at the controls in the event of a problem over an average one, just to give us every chance of a soft landing and survival. The economy so far has been resilient and strong enough to brush off retarding effects of this government, but if tricky times are near, we need more talent and experience at the cockpit. If the steam is running out, having this government at the controls at this time would be two bad things at the same time.

I reckon I could pick a few boys and girls from my work place that can do better for about 90k each per year.

 

[nulla nulla]

Westpac had a lot of support arround the $20.50 level before falling to $20.40 just before close. Closing on $20.42 was a fairly good result, only marginaly down from yesterdays close as the u.s.a politicians continue to haggle while the world markets burn.



If they don't sort it out this week end, I can't see them getting a result by Tuesday. If left unresolved, wbc with its' larger exposure to off-shore borrowing, will likely drop a lot more.

 

[alexandro]

Its now 3 months duration and 22% drop from the late April peak. A rally should come.

 

[nulla nulla]

Yeah, we keep telling ourselves that and the share price keeps creeping lower. Just like it did from November 2007 to March 2009. Then it rallied. Hopefully this is not the start of the double dip recession.

 

[nulla nulla]

Yeah, we keep telling ourselves that and the share price keeps creeping lower. Just like it did from November 2007 to March 2009. Then it rallied. Hopefully this is not the start of the double dip recession.

 

[nulla nulla]

Must be an echo .

 

[Julia]

Its now 3 months duration and 22% drop from the late April peak. A rally should come.

Should it? Why?

 

[alexandro]

Good to see Julia policing this site again and again. Checking for spelling, asking questions and holding people accountable for their comments.

I do alot of thinking and research before i do a post. It is based on prior WBC behaviour. You could see today for the first time in a while some buying strength when it fell under 20. Why wouldn't you buy under 20 when many bought at 23-24-25?

Something unexpected and favourable will make it bounce soon.

 

[skc]

Why wouldn't you buy under 20 when many bought at 23-24-25?

Something unexpected and favourable will make it bounce soon.

That is such fantastic logic.

Hang on... for every buyer there has to be a seller.

So why wouldn't you sell under 20 when many already sold at 23-24-25?

Something unexpected and favourable to the shorters will make it drop soon.

 

[tinhat]

Price $20.10
EPS $2.10 (forecast)
PE 9.95
Yield 7.46%
Yield grossed up for franking credits* ~ 10.6%

* Effective rate of return, after tax, for a super account in pension mode.

Let's assume zero EPS growth. Let's assume that return on equity stays at around the current 20% rate. Reasonable forecasts. At some point a > 10% effective dividend yield has to be a compelling argument even for a risk averse SMSF to buy shares in WBC rather than rolling over a term deposit.

 

[ajjack]

'Something unexpected and favorable will make it bounce soon' ... you say.

Hmmm ....... wonder what it could be, and I hope your right, but somehow
cannot see a sudden change in WBC direction.

Enough of the wishin' and hopin' in these threads and lets have some facts!

 

[nulla nulla]

Price $20.10
EPS $2.10 (forecast)
PE 9.95
Yield 7.46%
Yield grossed up for franking credits* ~ 10.6%

* Effective rate of return, after tax, for a super account in pension mode.

Let's assume zero EPS growth. Let's assume that return on equity stays at around the current 20% rate. Reasonable forecasts. At some point a > 10% effective dividend yield has to be a compelling argument even for a risk averse SMSF to buy shares in WBC rather than rolling over a term deposit.

It would appear that a section of the market agrees with your analysis. Westpac closed higher than it opened. Also, comparing wbc with the other three big aussie banks, wbc fell proportionaly less yesterday than the other three.

This point is interesting in that: WBC has more overseas borrowings than the other three; WBC is seen as having more exposure to the mortgage sector in NSW than the other three and; the market (and hedge funds) has been pushing wbc down further than the other three.

Yesterday wbc had a higher than normal turnover. Buyers appear to see wbc as the better bargain of the banks. At this point wbc has a low price earnings ratio, a good yield (dividend plus franking credits) and the long term prospects of a good capital gain when it returns to normal pricing levels.

As always, do your own research.

 

[Julia]

I do alot of thinking and research before i do a post. It is based on prior WBC behaviour. You could see today for the first time in a while some buying strength when it fell under 20. Why wouldn't you buy under 20 when many bought at 23-24-25?

Something unexpected and favourable will make it bounce soon.

That is such fantastic logic.

Hang on... for every buyer there has to be a seller.

So why wouldn't you sell under 20 when many already sold at 23-24-25?

Something unexpected and favourable to the shorters will make it drop soon.

Price $20.10
EPS $2.10 (forecast)
PE 9.95
Yield 7.46%
Yield grossed up for franking credits* ~ 10.6%

* Effective rate of return, after tax, for a super account in pension mode.

Let's assume zero EPS growth. Let's assume that return on equity stays at around the current 20% rate. Reasonable forecasts. At some point a > 10% effective dividend yield has to be a compelling argument even for a risk averse SMSF to buy shares in WBC rather than rolling over a term deposit.

This, plus nulla's post, is the sort of reasoning that's constructive and interesting, rather than some vague assertion that 'it has to go up'.

Tinhat, your suggestion here will be even more valid if interest rates start to drop, as is looking possible. But even then, it's (for me, anyway) difficult to accept the continuing diminution of capital if the downtrend continues as reasonable exchange for the very good yield.

How do you weigh up these essentially opposing considerations?

'Something unexpected and favorable will make it bounce soon' ... you say.

Hmmm ....... wonder what it could be, and I hope your right, but somehow
cannot see a sudden change in WBC direction.

Enough of the wishin' and hopin' in these threads and lets have some facts!

Thanks, aijack, that's the point I was trying to make.