Mark Lister , 24 January 2016

Part of me is hoping some serious panic sets in and this market sell off gets much worse.

At the moment, it’s been a little underwhelming. The headlines this year have regularly included words like plunge and collapse, which suggest there should be bargains to be had left, right and center.

But alas, most of the assets I’d like to own haven’t fallen nearly enough to provide any incentive to back the truck up. What’s the point of market turmoil if the best stuff doesn’t actually fall very far?

Take the local share market for example, it’s down a little over 4 per cent this year, a much less dramatic decline than the 10 per cent plus falls we’ve seen offshore.

Of the top 20 stocks, Xero is the only one that’s suffered a double-digit drop. The other 19 have only fallen 3.5 per cent on average, nowhere near enticing enough to get bargain hunters or value investors excited.

Even looking internationally, it’s more difficult than you’d think to find a beaten up blue chip opportunity.

Australian shares have fallen 9.0 per cent, more than twice as heavily as our market. However, the exceptional weakness in the oil and mining sectors is what’s dragged the headline index down, and I don’t really want any of the companies in that space.

Very few of the good stocks have fallen anywhere near that level.

Healthcare, real estate, utilities and industrials – where many of the best companies reside – are only down 3.4 per cent on average. Again, hard work for someone trying to profit from all the panic. The Australian banks are starting to look interesting, having fallen by 10.0 per cent, but that’s about it.

Go further afield and it’s a similar story. On the face of it, the US, European and UK markets have fallen heavily, but the energy and mining companies are again the ones that have seen the extreme end of that weakness.

The currency has also fallen in line with those global markets, so in NZ dollar terms US shares are down just 3.3 per cent this year. It’s nice to know our currency is doing its job as a shock absorber during periods of uncertainty, but not helpful to those of us who want to put some cash to work.

China and the emerging markets are where we’re really seeing some pain, with shares in those regions down 42 per cent and 33 per cent respectively, since the peaks of last year. However, buying opportunities only exist in assets you want to own in the first place, and I’ve got no interest in either of those regions, even at these levels.

There’s still time for things to get worse, despite the fact that much of the economic data in the US, Europe and certainly here in New Zealand is still looking reasonable. With oil prices showing no sign of stability, we still might see negative sentiment reach the extreme levels needed for the correction turn into something more substantial.

Fingers crossed markets will get a bit more anxious yet, maybe then there will something to get excited about.