What Oz shares would you buy in the event of a market crash?

[ghworker2010]

I have my own ideas on this subject but thought I would ask what top 3 shares you would buy on the Australian stock exchange in the 

event of a significant market crash- in a Covid 19 china virus world. 

 

I believe a market crash will occur once either oz or the states is officially declared to be in a recession or depression (ie depressed gdp growth). Or if an airline or other big business goes bust. 

 

If you have previously traded on ASX please list your top 3 and reasons

thanks

[Crossy]

Eggs!

 

[PatOngo]

Kleenex...……….toilet paper!

[ianezy0]

5 minutes ago, Crossy said:

Eggs!

 

Is that a yolk.

your reply seems to be  scrambled!

[ianezy0]

On a more serious note: Banks.

but don’t forget the 1 st quarter reporting season which in the recent years has been none too rosy if you research the banks past history. End of year reports will be the decisive factor for an official depression, i.e. 2nd quarter negative GDP. Timing will have to be perfect to buy before this time because there may well be an upside, but when and for how long. If no depression then skies the limit! 

 

Edited March 28, 2020 by ianezy0

[RJRS1301]

CSL before the crash

Edited March 28, 2020 by RJRS1301

[ianezy0]

5 minutes ago, RJRS1301 said:

CSL before the crash

I bought a lot of CSL for $45 in 2010. Sold for a $4 PS profit a year later. Then...bang....look what happened ???????????????? the emojis are not me laughing, but crying!

[RJRS1301]

3 minutes ago, ianezy0 said:

I bought a lot of CSL for $45 in 2010. Sold for a $4 PS profit a year later. Then...bang....look what happened ???????????????? the emojis are not me laughing, but crying!

currently $342

[wordchild]

Th Oz banks are still pretty expensive, by global standards, (eg look at the big Sing banks)  Capital positions are pretty strong though.

i like the big miners , but much cheaper  to buy the London listed versions of Rio or BHP , they average around a 20% discount there ,for the same company!

In a real collapse i would look at Fortescue again (i sold it recently and have some regrets about that) , other than that maybe Telstra or Transurban

[ianezy0]

44 minutes ago, RJRS1301 said:

currently $342

Is that the DOW as it’s currently $279 on ASX?

Either way, in hindsight, I should have held ????

[ianezy0]

29 minutes ago, wordchild said:

Th Oz banks are still pretty expensive, by global standards, (eg look at the big Sing banks)  Capital positions are pretty strong though.

i like the big miners , but much cheaper  to buy the London listed versions of Rio or BHP , they average around a 20% discount there ,for the same company!

In a real collapse i would look at Fortescue again (i sold it recently and have some regrets about that) , other than that maybe Telstra or Transurban

Currently the banks are approx. 40% undervalued and will likely devalue further.

 

My apologies Wordchild, I misread your  post And I agree with you in that they are expensive by global standards. 
Still, if a recession is held off there could still be a position to invest for short term profit. Cheers.

Edited March 28, 2020 by ianezy0

[Lacessit]

My shopping list ( cashed up presently ) is ANZ, AVJ, BHP, PTM, TLS, WES, and WPL. You can thank me later, with a small gratuity.

[wordchild]

11 minutes ago, ianezy0 said:

Currently the banks are approx. 40% undervalued and will likely devalue further. Please corroborate your statement on the banks being expensive. cheers

I said expensive "by global standards" , banks all over the world have been smashed in recent months. its just my opinion but  maybe worth having a look at bank valuations across a range of measures, across a number of different markets, maybe you will see what i mean. 

[AussieBob18]

Post: "in the event of a significant market crash" 

What are you talking about??

The ASX has gone from 7200 to 4800 - is that not significant enough??

 

 

[ianezy0]

14 minutes ago, wordchild said:

I said expensive "by global standards" , banks all over the world have been smashed in recent months. its just my opinion but  maybe worth having a look at bank valuations across a range of measures, across a number of different markets, maybe you will see what i mean. 

Yes my apologies Wordchild, I did edit my above post. Cheers

[ianezy0]

10 minutes ago, AussieBob18 said:

Post: "in the event of a significant market crash" 

What are you talking about??

The ASX has gone from 7200 to 4800 - is that not significant enough??

 

 

Yes its lost a lot yet in 2008 it dropped approx. 50% which is a possibility if a recession also occurs.

[wordchild]

10 minutes ago, ianezy0 said:

Yes my apologies Wordchild, I did edit my above post. Cheers

noted. 555. I agree , at some point the Oz banks will be a great buy, but for me, for the moment, i am holding off.

Edited March 28, 2020 by wordchild

[AussieBob18]

12 minutes ago, ianezy0 said:

Yes its lost a lot yet in 2008 it dropped approx. 50% which is a possibility if a recession also occurs.

Not in one month it didnt !!  I was there and very much involved.

The ASX has dropped more in one month, than it ever has before.

On 20th February the ASX was 7255 and on 24 March it was 4564 - that is an all-time record.

The largest ever single one day drop in the ASX occurred on 16th March 2020.

The current collapse in one month is bigger than any month in the 2008/9 GFC and the 1929 Wall Street Collapse.

 

Are some of you now realising the economic damage that has been done?  

For a virus that is killing less people than car accidents??

[ianezy0]

10 minutes ago, AussieBob18 said:

Not in one month it didnt !!  I was there and very much involved.

The ASX has dropped more in one month, than it ever has before.

On 20th February the ASX was 7255 and on 24 March it was 4564 - that is an all-time record.

The largest ever single one day drop in the ASX occurred on 16th March 2020.

The current collapse in one month is bigger than any month in the 2008/9 GFC and the 1929 Wall Street Collapse.

 

Are some of you now realising the economic damage that has been done?  

For a virus that is killing less people than car accidents??

No Bob, not in 1 month, I didn’t realise you were talking about a time cycle. Even so, this could get far worse. I also remember trying to time the bottom of the V in 2009/2010.

[AussieBob18]

10 minutes ago, ianezy0 said:

No Bob, not in 1 month, I didn’t realise you were talking about a time cycle. Even so, this could get far worse. I also remember trying to time the bottom of the V in 2009/2010.

Me too - and it took nearly 10 years for the ASX to recover the lost market value - but many people lost their life savings and many companies dissappeared forever.  

Unlike the GFC which was a much slower, this 'virus decline' is reminiscent of the 1929 collapse where the sharemarket dropped very quickly over a week and then declined for over a year - and that took over 2 decades to recover. 

 

[Susco]

1 hour ago, wordchild said:

i like the big miners , but much cheaper  to buy the London listed versions of Rio or BHP , they average around a 20% discount there ,for the same company!

How can a share of the same company in London be traded at a 20% discount over the price in Sydney?

 

Sure means that the stock on the London exchange represents a different value of the company

[AussieBob18]

But to answer the OP - Banks.  The big 4 obviously.  Shares in the big 4 will probably double within 12 months if/when the recovery starts.  Because the only way this will recover is for Govts to inject funds into the economy - funds that must go through banks - and that is how banks make money - shuffling other people's money around.

 

[wordchild]

16 minutes ago, Susco said:

How can a share of the same company in London be traded at a 20% discount over the price in Sydney?

 

Sure means that the stock on the London exchange represents a different value of the company

 1 london Rio owns exactly the same proportion of the company as 1 OZ share of Rio (same is true of BHP). And it’s true that the London listed shares , currently, trade at around a 20% discount to the OZ shares.

there are a number of explanations for this anomaly. The main one is probably the different treatment of dividend taxation between the two countries.ie the ability for OZ tax payers (and institutions) to make use of the franking credits both companies have. Similar tax advantages are not available to U.K. shareholders.

there are also other, more subtle, factors at work.

[wordchild]

9 minutes ago, wordchild said:

 1 london Rio owns exactly the same proportion of the company as 1 OZ share of Rio (same is true of BHP). And it’s true that the London listed shares , currently, trade at around a 20% discount to the OZ shares.

there are a number of explanations for this anomaly. The main one is probably the different treatment of dividend taxation between the two countries.ie the ability for OZ tax payers (and institutions) to make use of the franking credits both companies have. Similar tax advantages are not available to U.K. shareholders.

there are also other, more subtle, factors at work.

The discount is pretty wide at the moment,and, for me , looks anomalous. The London version is normally at discount (for the reasons above) but this looks out of line and maybe an opportunity. It has not always been this wide: for example I well remember , in 2016 , buying the OZ version of Rio when it was (briefly) trading below the price of the London Rio quote!

Edited March 28, 2020 by wordchild

[Susco]

17 minutes ago, wordchild said:

The London version is normally at discount (for the reasons above) but this looks out of line and maybe an opportunity.

Or maybe you missing something?

 

I'm sure Aussie investors also weren't born yesterday and will have noticed the same discount, so if it was a real opportunity I believe they would now be dumping their Aussie shares, and replacing them with London traded ones.

 

Since you also say that the price discount is not just for 1 company but at least 2, I can't get rid of the feeling that something is missing.

[wordchild]

52 minutes ago, Susco said:

Or maybe you missing something?

 

I'm sure Aussie investors also weren't born yesterday and will have noticed the same discount, so if it was a real opportunity I believe they would now be dumping their Aussie shares, and replacing them with London traded ones.

 

Since you also say that the price discount is not just for 1 company but at least 2, I can't get rid of the feeling that something is missing.

this is nothing new, and it’s  important to note that the shares (in both Rio and BHP) are not fungible, ie you cannot simply buy the U.K. listed shares and convert them to an OZ listing. 
The London listing of Rio and BHP has normally traded at a discount to the OZ version. A brief google search would confirm that for you.
The size of the discount has varied over time and, as I said above, there have been brief periods when the London version has even  traded at a small premium.
there are a number of factors at work here, eg the dividend tax advantages in holding  Australian shares for certain (Australian) tax payers.

However  what I said above is accurate, if you are an international investor, with no tax benefit, you are much better off owning the U.K. listed shares. Ie the shares are cheaper and your dividend return would be better than holding the OZ version.

Search google  for “Elliot partners and BHP” this is a giant US hedge fund who have been building a position in U.K. listed BHP and trying to persuade the BHP management to cancel the U.K. listing of BHP and transfer everything to the OZ listing. This would be a huge benefit to the U.K. shareholders (and Elliot, 555) who would experience some uplift in value, however it would potentially devalue the OZ shares as the available tax credit could be reduced. So far the BHP management are resisting any changes.

as I mentioned above there are also some more subtle reasons for this anomaly, but I doubt these are that significant.

Edited March 28, 2020 by wordchild

[ghworker2010]

2 hours ago, AussieBob18 said:

Post: "in the event of a significant market crash" 

What are you talking about??

The ASX has gone from 7200 to 4800 - is that not significant enough??

 

 

no. you aint seen nothing yet bob

[ghworker2010]

56 minutes ago, Susco said:

Or maybe you missing something?

 

I'm sure Aussie investors also weren't born yesterday and will have noticed the same discount, so if it was a real opportunity I believe they would now be dumping their Aussie shares, and replacing them with London traded ones.

 

Since you also say that the price discount is not just for 1 company but at least 2, I can't get rid of the feeling that something is missing.

Its not quite as simple as you imply. If one has an oz trading account with a big 4 bank one can 

obviously trade and buy the Uk stock via the trading account. But then you have exchange rate

risk. The value of your portfolio either increases or decreases on a  daily basis according to 

what happens with the respective exchange rate aud/gbp (and of course what happens daily 

with the share price. Its why most aussies don't do it and just trade their oz account at the ASX

[rhodie]

In the event of a crash! ???? I've got news for you Rip van .....

[mshs]

These top 10 bought in proportion to their market-cap yields 6.64%.  Obviously, the dividends are going to be slashed as a result of the Wuhan virus, which the market has already discounted.  So, perversely, when there is a cut in the dividend, the stock will go up and with news of lay-offs.

 

CBA	Commonwealth Bank
BHP	BHP Billiton Ltd
WBC	Westpac Banking Corp
CSL	CSL Ltd
ANZ	ANZ Banking Group Ltd
NAB	National Aust. Bank
WES	Wesfarmers Ltd
MQG	Macquarie Group Ltd
WOW	Woolworths Group Ltd
TLS	Telstra Corporation