Afternoon Report / Another lethargic session for the ASX; CYBG reported results

By Market Matters 16 May 17

Another lethargic session for the ASX; CYBG reported results

Market Matters Afternoon Report 16th May 2017

A higher open this morning despite both NAB and Macquarie trading ex-dividend before some lethargic mid-morning profit taking crept in again pushing the index a long way off the session highs…We had a range today of +/- 36 points, a high of 5871, a low of 5835 and a close of 5850,  up +12pts or +0.21%,

May / June remains a very weak period for stocks with the average decline on the ASX post GFC -6.9%. To date we’ve fallen around 2% so clearly there is room for further weakness and it’s the reason why we are maintaining high levels of cash during this period (currently +27.5%). That said, the components of the index have had some variance in terms of performance leading into this period. Banks were very strong in April which underpinned the markets positive return however resources lagged.

The weakness at the start of May has largely been driven by a reasonable correction in the banks, however the selling now looks nearing completion with our downside targets only 3% lower for the sector, implying that the bulk of selling is done for the banking stocks. In terms of resources, they were weak in April but have found some form in early May with BHP trading back up through $24 today.  They now look like they have found a low with higher prices a strong possibility. So, if both banks and resources have seen the worst, why are we still in so much cash?

The market is too complacent and any decline is likely to be short and sharp if it plays out throwing up good opportunities.

ASX 200 Intra-Day Chart

ASX 200 Daily Chart

CYBG (CYB); A stock we hold in the MM portfolio from lower levels has just reported and the conference call is on shortly which we need to run to….so more details forthcoming after that however on first run through the result is messy but OK and importantly the outlook statements are reasonable.

You’ll note a reasonable amount of RED on the numbers  above which implies a miss v consensus however the numbers that are the important ones were better (cash earnings) at £90m which was ahead of the street at £83m however we saw a few looking for high 70’s…

We own this stock given UK exposure but also because it’s a self-help turnaround play, below is FY17 guidance however out to 2019 is where the costs really come down and earnings get a boost.


Have a great night,

The Market Matters Team


Market Matters may hold stocks mentioned in this report. Subscribers can view a full list of holdings on the website by clicking here. Positions are updated each Friday.



All figures contained from sources believed to be accurate.  Market Matters does not make any representation of warranty as to the accuracy of the figures and disclaims any liability resulting from any inaccuracy.  Prices as at 16/05/2017.  5.00PM.

Reports and other documents published on this website and email (‘Reports’) are authored by Market Matters and the reports represent the views of Market Matters. The MarketMatters Report is based on technical analysis of companies, commodities and the market in general. Technical analysis focuses on interpreting charts and other data to determine what the market sentiment about a particular financial product is, or will be. Unlike fundamental analysis, it does not involve a detailed review of the company’s financial position.

The Reports contain general, as opposed to personal, advice. That means they are prepared for multiple distributions without consideration of your investment objectives, financial situation and needs (‘Personal Circumstances’). Accordingly, any advice given is not a recommendation that a particular course of action is suitable for you and the advice is therefore not to be acted on as investment advice. You must assess whether or not any advice is appropriate for your Personal Circumstances before making any investment decisions. You can either make this assessment yourself, or if you require a personal recommendation, you can seek the assistance of a financial advisor.  Market Matters or its author(s) accepts no responsibility for any losses or damages resulting from decisions made from or because of information within this publication. Investing and trading in financial products are always risky, so you should do your own research before buying or selling a financial product.

The Reports are published by Market Matters in good faith based on the facts known to it at the time of their preparation and do not purport to contain all relevant information with respect to the financial products to which they relate. Although the Reports are based on information obtained from sources believed to be reliable, Market Matters does not make any representation or warranty that they are accurate, complete or up to date and Market Matters accepts no obligation to correct or update the information or opinions in the Reports.

If you rely on a Report, you do so at your own risk. Any projections are estimates only and may not be realised in the future. Except to the extent that liability under any law cannot be excluded, Market Matters disclaims liability for all loss or damage arising as a result of any opinion, advice, recommendation, representation or information expressly or impliedly published in or in relation to this report notwithstanding any error or omission including negligence.

To unsubscribe. Click Here