With Australian bank deposits, guaranteed, upto all amounts, I believe it becomes the first safe haven for the nomadic hedge funds in APAC. I only focus on hedge funds as they are the most liquid and nimble to move money in/out based on how a situation develops, therefore they are the ones who hold the maximum short-term impact.
I expect the outflow from Australian equities will get stemmed. This should be visible in the AUD arresting its slide, and climbing up from 64 cents on Monday and Tuesday, as money re-enters the country.
This will mean the vicious cycle of margin calls and falling sp's will stop for now. It also means LNC has skipped the margin call selloff's of Thursday and Friday - IMO it was the driving force behind the drop in ASX.
With the noise out of the picture, LNC should get closer to its value and get back to $4.00-$4.50. I have not tried to ascertain value based on the outcome of Chinese deal, as its implication are far greater than the cash-backing. It will make all price ranges I see today irrelevant. It will give birth to a monopolist.
Note: I am not a finance professional. These are just some of my views that makes me invest in LNC
LNC Price at posting:
$3.20 Sentiment: None Disclosure: Held
