ASX Wraps Up Volatile Month of Trade

The ASX has reported total capital raised was down $1.2 billion and the average daily number of trades was 96 per cent higher than last year as Covid-19 made a huge impact on the Australian stock market in March.

Shareholders flocked to the market making on average 67.5 million trades each day worth $10.5 billion as economists and companies alike dealt with an uncertain, volatile market.

Total capital raised dropped by 22 per cent to $4.16 billion compared to $5.32 billion the same time last year.

The ASX also recorded the worst day of trade since the global financial crisis on 20 March with Australian shares dropping $140 billion in value which was felt by plummeting Australian real estate investment trusts.

The ASX 200 A-REIT sector fell 10 per cent from 20 February 1730.38 to the beginning of March 1562.60, and again by 44 per cent a low of 877.40 on March 23 before slowly starting to recover and finishing the month at 1022.04.

As a result of coronavirus uncertainty many big companies withdrew guidance including Dexus, Mirvac, REA Group, Vicinity Centres and Scentre Group.

Business for pubs, shopping centres and hotels slowed or stopped altogether while, others adapted the wake of Covid-19 ramping up the production of hand sanitiser, panic buying boosted supermarkets and 3D printed increased medical supplies.

However no-one was immune to the virus even an employee at ASX’s Bridge Street office in Sydney tested positive on 14 March and as a result the ASX asked all employees interstate and overseas to “work remotely until further notice” .

In a bid to ensure stability and resiliency across the industry the Australian Securities and Investments Commission issued directions to large equity market participants to reduce the number of trades by 25 per cent from those seen on 13 March.

This was due to increases in trade, a backlog of work and a strain on the processing and risk management capability of market infrastructure and participants.

ASX chief executive Dominic Stevens said the supported the steps as trading volumes on both ASK and Chi-X were unprecedented.

“This has prevented operational challenges for the industry, albeit the industry has worked together to ensure it has been able to function in these extraordinary circumstances,” Stevens said.

ASIC also gave listed companies the ability to raise capital quickly by enabling “low doc” offers to be made to investors with more lenient requirements due to Covid-19.

“We want to give companies more fundraising flexibility in these circumstances. Many will need to seek a trading suspension to understand how Covid-19 will affect them and to put a capital raising in place,” commissioner John Price said.