Australian banks have been subject to a considerable amount of bad press over the course of the last 6 months. This has ranged from trader scandals and private wealth and financial advisor misconduct to housing market concerns and bad debt loans. Collectively, the bad news has seen the banking sector perform dismally.
Financials are the largest sector of the ASX and comprise of almost half the index. This means we banks perform poorly, the general market tends to also perform poorly given their influence.
The largest 4 companies on the ASX alone are the major for banks and have a combined weighting of almost 27%. Accordingly, the ASX is not very well diversified and at the whim of the performance of banks.
The latest bad news surrounding banks hit late last week, with both ANZ and Westpac issuing statements that their bad loans will be materially worse than they had previously expected. This has seen almost $25 billion wiped off...
Stock Markets, Simplified.