Banks hit hard in market’s jitters

Banks hit hard in market's jitters

The lower Australian dollar is making foreign investors run for the exits.

Ryan Newman (TMFNewmy)

Ryan Newman (CFA) is the Director of Research of The Motley Fool Australia, and Portfolio Manager for the Pro and North Star services. Ryan’s interest in investing and stocks began at a young. His journey with The Motley Fool started first as a member but when the company first came to Australia he joined the team as one of our writers. Recognising his investing talent and passion, it wasn’t long before he was approached to join the investing team as a research analyst on Pro. Ryan is passionate about learning and continual development. He earned his Chartered Financial Analyst (CFA) designation in 2022, and has completed his Bachelor of Accounting and his Graduate Certificate of Corporate Finance. Ryan loves spending time with his young family as well as non-fiction reading, catching the latest movies and following his sports team, the St Kilda Saints (AFL).

Published July 4, 2013 9:30 am AEST

The big four banks were amongst the hardest hit on Wednesday as the market's rollercoaster ride continued, with foreign investors withdrawing their holdings from high-yielding stocks based on the low Aussie dollar, falling commodity prices and overseas turbulence.

In what has been an unpredictable beginning to the new financial year, the S&P/ASX 200 (^AXJO) (ASX: XJO) fell 1.9% on Monday before recovering on Tuesday, where 2.6% was added in what marked the index's best day of trading in 20 months. On Wednesday, that gain was almost all reversed with another 1.9% fall, whereby around $25 billion was wiped from stocks.

Westpac (ASX: WBC) was again the heaviest to fall out of any of the big banks, losing 2.64% in value, whilst ANZ (ASX: ANZ), NAB (ASX: NAB) and Commonwealth Bank (ASX: CBA) all fell between 0.54% and 2.14%. New figures released by Australian Prudential Regulation Authority earlier in the week revealed that Westpac's market share has slipped by 0.7% over the last year and it recorded the lowest level of growth in home loan lending in May out of any of the banks.

Whilst these figures likely dragged Westpac's shares further than the other banks yesterday, a diminishing Australian dollar is also decreasing the value of foreign investors' holdings, causing many to run for the exit.

Foolish takeaway

Whilst the market's jitters can open up very attractive investment opportunities, the banks still present as expensive options to add to your portfolio, despite their heavy losses in recent weeks.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

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