In what has been a terrible day for local investors, Commonwealth Bank of Australia (ASX: CBA) has extended its sharp decline falling to a fresh 52-week low price of $71.13.
The last time the shares traded that low was in October 2013 as the shares ascended towards their peak. Although the banks performed exceptionally well through the bull market stretching from early 2009 to early 2015, they have also been sold down heavily through the recent turmoil.
That is certainly the case today as investors around the world continue to contend with falling commodity prices and a slowdown in China, which threatens to spread to Australia's own economy.
While Commonwealth Bank's shares fell 2.2%, Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd. (ASX: NAB) fell 2.6% and 2.5%. Westpac Banking Corp (ASX: WBC) fared even worse, sliding 2.8% by mid-afternoon.
A buying opportunity?
Although its share price hasn't traded this low in almost two years, I would still argue that now is not the time to buy shares in Commonwealth Bank nor any of its major rivals, for that matter. The tailwinds that the banks have enjoyed in recent years appear to be wearing off, which could hinder their ability to continue growing earnings which could, in turn, impact their dividends.
It could also see their share prices fall below their current levels, impacting those left holding on. I'm not necessarily suggesting that investors sell out of the banks completely, but would advise investors to ensure they maintain a well-diversified portfolio to ensure they're not overly exposed to the banks either.
