Tech & Science The Westpac share price fell 30% in March. Is this a buying opportunity?

13:57  01 april  2020
13:57  01 april  2020 Source:   fool.com

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The Westpac share price has continued to fall after the bank announced a high-level ‘Response Plan’ to the issues raised by AUSTRAC last week. AUSTRAC last week alleged that Westpac breached Australia’s Anti-Money Laundering and Counter-Terrorism Financing Act a staggering 23 million times.

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a close up of a red wall: Westpac © Provided by The Motley Fool Westpac

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The Westpac Banking Corp (ASX: WBC) share price has not been spared from this ASX bear market in any way.

Since March 1, 2020, the Westpac share price has gone from $23.19 to $16.24 (today’s share price at the time of writing) – a 29.97% fall over the month.

That compares with the S&P/ASX 200 Index (ASX: XJO) tanking by 18.55% over the same period.

So as you can see, Westpac has significantly underperformed during this market crash. In fact, since mid-February (when the ASX 200 last peaked), Westpac has lost 37% of its value, whilst the ASX 200 has lost around 27%.

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What is the instantaneous price move that a large buy order causes? The answer depends on your order type and the current market state such as the level I understand the general principal that when significant buy orders comes in relative to the sell orders price goes up and when a significant sell

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So this company has (frankly) been dead weight in both investors’ portfolios and the broader ASX 200.

But could this be a buying opportunity for the ASX’s oldest company?

Why the Westpac share price has tanked in March

Westpac (like all of the ASX banks) has been hit hard by the worries over the coronavirus-induced economic shutdown.

Since most of Westpac’s profits come from interest on loans such as mortgages and business loans, the risk of these loans defaulting during this time is high.

Furthermore, the government is working with the banks to work out contingency arrangements for landlords, homeowners, and businesses that might be experiencing financial hardship and subsequent difficulty in servicing loans at the current time.

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That makes it difficult to respond to a pricing objection if you don’t want to immediately lower your price . While discounting has its place in the sales process, being This is a fast track back to value. Make them think about their situation and visualize what your product or service could do for them.

This is likely to lead to a short-term drop in revenue for banks like Westpac, although it should reduce default rates in the medium-to-long-term.

Is this a buying opportunity?

I do think that at the current share price, there could be some value in Westpac shares. We haven’t seen this kind of share price for Westpac since the GFC over ten years ago (and before that, 2003).

In saying this, I have serious doubts over the ability for Westpac to maintain its current dividend payouts (which is why most investors own ASX banks in the first place).

There is a lot of uncertainty over Westpac’s short-term prospects and even long-term prospects if interest rates stay at zero for an extended period of time. I think most ASX companies will come out the other side of this coronavirus pandemic in fine form, but in Westpac’s case, I’m not entirely sure what to expect.

When I’m not sure if a company is fairly priced or at a screaming bargain, it feels too much like a gamble! Therefore, I’m not really comfortable investing in Westpac shares right now, and I think there are better opportunities out there for ASX dividend income today.

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When early exercise is not possible, we can argue that two portfolios that are worth the same at time T must be worth the same at earlier times. If we buy the call, short the put, and short the stock, we cannot be sure of the result because we do not know when the put will be exercised.

Suppose you bought three tickets to a concert in advance at the University ticket window. At the last minute one friend cancelled, so you could use only two of those tickets. You scalped, or sold, the third ticket just outside the entrance to the concert for slightly more than the price you had originally paid.

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Mortgage lending fell as COVID-19 loomed .
The value of new mortgages fell in February, even before the most serious coronavirus lockdown measures were in place. Economists had tipped the total value of housing loans to slow from 4.6 per cent growth in January as the COVID-19 outbreak emerged into the national consciousness.But a $1.26 billion decline in the total value of housing loans to $19.46 billion was well at odds with the predicted 1.5 per cent increase.The value of owner-occupier, investor and fixed-term personal lending went backwards during the month.Owner-occupiers took out $14.15 billion in mortgages during February, down 1.

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