THE Australian sharemarket fell by the most in six weeks today as investors stepped back before a deluge of new share issues.
The benchmark S&P/ASX 200 closed down 1.4 per cent at 5319.2 after hitting a four-week low of 5308.5.
After reaching a five-and-a-half-year high of 5457.3 three weeks ago on improving international economic conditions, the market has suffered from profit-taking ahead of initial pubic offers in the Asian region.
“There’s a lot of upcoming share issuance,” BBY senior institutional adviser Peter Argyrides said. “People just seem to be taking some profits to make room for that.”
There are 13 IPO coming up in Australia – including a $ 600 million offering from Nine Entertainment – and about 30 in Asia, according to Goldman Sachs.
“It is a thought in our mind and I think a number of people have been loading up on cash,” White Funds Management managing director Angus Gluskie said.
“If people don’t have the cash on hand they’ve got to look at selling stocks to rebalance their portfolios to take up some of these IPO’s.”
Westpac, ANZ Bank and National Australia Bank fell 1.8 per cent to 2.5 per cent after trading ex-dividend last week while Commonwealth Bank of Australia declined 2.3 per cent after hitting a record following its trading update last Wednesday.
BHP Billiton fell 1.2 per cent to $ 37.63 after hitting a nine-month high of $ 38.28 on Monday. However, Fortescue Metals rose 2.5 per cent with Blackrock emerging as a substantial shareholder of the iron-ore miner.
“People can focus on expectations that the Federal Reserve will start tapering its bond-buying program but the fact is resources stocks are outperforming,” Mr Argyrides said. “By the time tapering happens it will be well priced into the market.”
The S&P/ASX 200 could fall 3 per cent to 4 per cent in the next few days as profit-taking was likely to continue, Mr Argyrides added.
Among stocks that bucked the selling was CSR which rose 8.3 per cent after the building-materials maker said first-half net profit almost tripled to $ 46.1 million.
Myer rose 1.1 per cent after the department store said trading conditions improved “modestly”, but remained “patchy” in the 13 weeks ending October 26.
Chief executive Bernie Brooks said the quarterly sales result met the company’s expectations and provided “encouragement” for the Christmas period.