On the news available to me at the moment, AFG's selldown today...

On the news available to me at the moment, AFG's selldown today and yesterday is primarily the result of a selldown in Japanese banking shares. (There has probably also been a small amount of Rubicon-related selling, but I think the Rubicon issue, now that the deal has gone through at a lower price, is increasingly becoming a non-issue).

The recent Bank of Japan tankan survey indicated weakening business sentiment, and this probably means the pace and timing of future Jap interest rate hikes will be pushed back.

While Allco's RIET trust has some Japanese real estate assets, like the selldown in US banking stocks, weakening Jap business sentiment and the performance of Japanese banks will have little or no material impact on AFG's earnings, so the sell-off is basically a sentiment play only.

Relative to other Aust banking stocks, AFG price movement is unusually sensitive to overseas financial stocks that have no obvious connection to allco's future earnings

It only required a bit of insto sentiment selling (on the basis of this vague Japanese news) when the Jap markets opened, and then the small fry day traders took over and pushed the price down 5% in late afternoon trading.

So, while there is no earnings-related reason for today's sell-down, as I've said in earlier posts, AFG is likely to remain volatile until the sub-prime crisis eases.