Market does not calibrate bad news proportionally. It is the direction of earnings that it cares about, not the magnitude of movement. CGH has been more than punished for its downgrade but still kept going down EVEN AFTER a 58% fall. On the other hand stocks which have had future growth fully priced in keep getting their share price pushed up, by even more than the prospective increase in earnings in the next reporting period(QAN, CBA, GMG, SUN, etc).
The entire resources sector, and particularly mining contractors have been crushed. Another example is NWH, trading at a P/E of 3.29 and dividend yield of 15.13%. Even if dividend is cut, still expect a yield of 13.44%, which even ANZ did not achieve during the GFC. The market's trading cum-downgrade.
CGH Price at posting:
40.0¢ Sentiment: Buy Disclosure: Held
