Commonwealth Bank of Australia (ASX: CBA) has continued its disastrous run today, taking another firm step towards officially falling into a bear market.
Although it briefly managed to rise above the $81 a share mark earlier in the day, the stock has since fallen back into the red-zone, hitting a fresh six-month low at just $79.80. That equates to a massive 17.5% decline since the shares peaked at $96.69 late in March as investors have continued to turn away from the nation's 'Big Four' bank stocks en masse.
While the stock has officially entered a "technical correction" – defined as a loss of 10% or more since its peak, generally within the space of two months – it is now facing an even worse scenario: an official bear market, which is after a stock loses more than 20% of its price.
Indeed, Westpac Banking Corp (ASX: WBC) is already at that stage, having lost 21.6% since its peak, while National Australia Bank Ltd. (ASX: NAB) is also verging on a bear market, sporting a 19.2% loss. Australia and New Zealand Banking Group's (ASX: ANZ) decline hasn't been quite as severe as that of its larger rivals, although it's still down 16.1% since it hit a high of $37.25.
Two months ago, most people would have thought you were crazy if you'd said Australia's largest banks were headed for a bear market, but that now seems like a possibility. With strong headwinds facing the banking sector, and the Australian economy as a whole, it seems reasonable to expect investors to continue turning their backs on the sector in search of superior investment opportunities.
