What is Happening to the ANZ Share Price?

What does ANZ do?

ANZ [ASX:ANZ] is one of Australia’s ‘big four’ banks. Under former CEO Mike Smith, it differentiated itself by pursuing an Asian growth strategy. But given the tougher competitive issues in the Asian banking market, the strategy hasn’t been a success. As a result, its share price has been under considerable pressure.

Making matters worse, today it announced that bad debts for the half year would be $100 million worse than predicted just a few weeks ago.

What’s happening to the ANZ share price?

The chart below shows ANZ’s share price performance over the past two years. Since peaking in April 2015 at just over $37, the share price declined 40% before rebounding slightly in March this year.

Woolworths Share Price

Source: BigCharts

But with today’s bad debt increase announcement, the stock price is under pressure again.

What now for ANZ?

The banking sector had a tremendous run from 2012 to 2015 on the back of falling interest rates and rising house prices. Over this time, bad debt charges also fell to near record lows.

But now they cycle is turning and bank profit growth and dividends will not be as strong in the future as they have been in the recent past.

The 50% decline in the share price since the 2015 peak tells you that. But just because the share price has corrected significantly doesn’t mean it’s a good time to buy.

The fundamentals and the charting outlook for ANZ are poor. There is a high probability that the share price downtrend will continue. One of my investment rules is to never buy into a share price downtrend. The odds just aren’t on your side and you’ll never know how far or long the downtrend in prices will persist.

That why I never assess a stock’s fundamentals without looking at the charts too. Combining fundamental analysis with charting can yield powerful results.

If you’d like to know more, click here.

Greg Canavan
Editor, Markets and Money

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Greg Canavan is a Contributing Editor at Markets & Money and Head of Research at Port Phillip Publishing. He advocates a counter-intuitive investment philosophy based on the old adage that ‘ignorance is bliss’. Greg says that investing in the ‘Information Age’ means you now have all the information you need. But is it really useful? Much of it is noise, and serves to confuse rather than inform investors. And, through the process of confirmation bias, you tend to sift the information that you agree with. As a result, you reinforce your biases. This gives you the impression that you know what is going on. But really, you don’t know. No one does. The world is far too complex to understand. When you accept this, your newfound ignorance becomes a formidable investment weapon. That’s because you’re not a slave to your emotions and biases. Greg puts this philosophy into action as the Editor of Crisis & Opportunity. He sees opportunities in crises. To find the opportunities, he uses a process called the ‘Fusion Method’, which combines charting analysis with more conventional valuation analysis. Charting is important because it contains no opinions or emotions. Combine that with traditional stock analysis, and you have a robust stock selection strategy. With Greg’s help, you can implement a long-term wealth-building strategy into your financial planning, be better prepared for the financial challenges ahead, and stop making the same mistakes that most private investors do every time they buy a stock. To find out more about Greg’s investing style and his financial worldview, take out a free subscription to Markets & Money here. And to discover more about Greg’s ‘ignorance is bliss’ investment strategy and the Fusion Method of investing, take out a 30-day trial to his value investing service Crisis & Opportunity here. Official websites and financial e-letters Greg writes for:

 


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