Posted May 30, 2018 04:16:16 A record-breaking $30 billion of Australian capital went bust last year when the Australian Stock Exchange (ASX) collapsed, triggering a massive sell-off in equities and a dramatic drop in the value of the country’s bonds.
The market was on course to end the year with an even bigger sell-up as investors were forced to put up their money to defend against a correction they knew was coming.
But with a huge fall in the price of stocks and bond yields, the market crash has left investors with even more losses than they would have had from a normal correction.
With the crash in equity markets, the biggest losers were institutional investors, which had put their money into the Australian stock market.
In the case of bond prices, the loss was $15 billion in 2016, and the biggest one for investors was the Commonwealth Bank of Australia, which lost $11 billion.
How big is the market meltdown?
The collapse of the ASX is not as bad as some people make it out to be.
While the market is in freefall, the number of outstanding bonds in the market has fallen by $7.7 billion since the collapse, according to data from the Australian Securities and Investments Commission (ASIC).
There is little doubt the crash is still far from over, but what has happened is not an unprecedented event.
In 2008, the US financial market plunged as the global financial crisis unfolded.
That year, there were about $60 billion in bonds outstanding, according the SEC.
This year, the ASIC has found that the total number of bonds outstanding has fallen to about $30.7 trillion, down from $31.9 trillion in 2016.
But what is happening now is far different.
The Australian stock and bond market has collapsed.
A collapse in equals has happened, as the ASIX’s stock market collapsed.
The ASX stock market plunged from $22.50 to $19.75 over the course of the year, according data from Bloomberg New Energy Finance.
And it’s not just the stock market that’s in free fall.
The Dow Jones Industrial Average dropped 7.7 per cent over the last six months, and has fallen 13 per cent since May 20.
The S&P 500 index fell 6.7 points and the Nasdaq index lost 4.5 points over the same period.
At the same time, the Australian dollar is rising by nearly 2 per cent.
So what does all of this mean for the future?
One big question is how long will the market collapse persist?
The ASIX, which is owned by Australian citizens, was not able to keep its stock market afloat for very long, said Mark Burt, an Australian market analyst at Capital Economics.
If it collapses completely, then it’s unlikely to recover.
“I don’t think this is going to be a one-off,” he said.
Instead, he expects the ASQS to be the next big market to suffer from a major correction.
For some time, investors have been buying the Australian equities market because it has historically been a good investment, and now they will have to take that risk.
Capital Economics is also predicting the ASRU will fall by about 50 per cent in the coming months.
Australia’s bond market is at risk from another major correction, which could come in the form of a major financial crisis.
We’re in a recession, but it’s still not too late to get out of it.
If you want to make sure you have capital available, you need to take advantage of the fact that the market continues to be down,” said Simon Johnson, chief economist at the Australian Institute of Management.
He said there’s also been a lot of speculation about the possibility of another financial crisis, and that it would take a significant correction to put the brakes on the market.