a given now..., page-19

re: chart for miner This is why some are selling I think....

No fundmantel reason ;)

Commsec's record margin calls
Geoffrey Newman
May 19, 2006
THE nation's biggest online broker says it has issued a record 133 margin calls this week as the share market suffers its biggest falls in months, although the numbers remain small in comparison with its large client base.

Commsec general manager Michael Blomfield said 133 margin calls were issued to margin lending clients so far this week, out of a client base of 60,000.

"That would be the biggest in a week," Mr Blomfield said.

It came as new figures from the Reserve Bank revealed the value of margin loans grew to a record $21.5 billion.

A margin call is issued when the value of the securities bought moves too far from the amount of the loan, as expressed by the loan-to-valuation ratio (LVR).

Large falls in the market typically trigger margin calls, forcing clients either to top up their account with more cash or sell securities to return to an acceptable LVR. If they don't, the lender can force the shares' sale.

Mr Blomfield said he regarded the number of margin calls as small and the "vast majority" had been met by the client injecting more cash into their account, suggesting they were not financially stretched.

The All Ordinaries index has plunged 4.5 per cent since it hit a record high of 5318.2 points a week ago, as a fall in world commodity prices triggered a sell-off, particularly of resource company stocks.

New data released by the RBA yesterday showed the value of margin loans grew to a record $21.5 billion during the March quarter, from $19.9 billion. The number of margin lending client accounts also grew to a record 156,000. The value of securities purchased with margin loans grew by more than $6 billion to a record $56 billion, still only a fraction of the $1.2 trillion value of the share market. The average number of margin calls per day per 1000 customers almost halved to 0.26, reflecting the strength of the share market in the quarter.

Macquarie Bank head of margin lending Steve Robertson said the number of margin calls there had not been significant.

He said LVRs, which now averaged 65 per cent in his client base, had fallen in recent times and clients were being more conservative in their borrowing.

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