Rally proves short-lived as financials lose value, traders cite “profit-taking”.
Felicity Duncan
22 July 2008 00:00
After briefly bobbing above water last week, financial services companies' stock prices are back in the drink, driven down by "profit-taking", according to traders.
As the charts below show, there has been a general negative trend in banks and financial services stocks since the last quarter of last year. A combination of local economic gloom and global financial market shocks sent South African banks, insurers and asset managers' counters down around 20% between July 2007 and July 2008.
Last week's rally is obvious on the charts, but much of the gains are being wiped out by this week's pummelling. Most pundits are ascribing the drop to "profit-taking"; arguing that after the brief rally shareholders were cashing out of the sector.
The table below shows the performance of the individual companies. Most remain positive over five days, but virtually all the counters are down when compared to a year earlier, or even January this year.
Another buying opportunity Most of the big overseas banks stay out of SA retail banking because present incumbents are so well established, there is little competition at play, they have a docile risk averse consumer. Whats not to love? A little spit and polish, some tough . .more love and profits will be excessive again... . .less
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