Here’s why these 4 shares crashed on the market today

Merry Christmas, Foolish readers, I hope you enjoyed your holiday break.

The S&P/ASX 200 (INDEXASX: XJO) is certainly feeling the holiday cheer, rising 0.7% to 5,242 points. This is down 4.2% from where we started the year.

A number of companies considerably underperformed the index today, however, and here’s why:

Beach Energy Ltd (ASX: BPT) shares fell 7.5% to $0.49 after the value of crude oil lost another 3% over the weekend to trade at US$36.70 a barrel. While shareholders have been punished, the number of investors looking to speculate on a rebound in decade-low oil prices is growing, and Beach alongside several other companies like Santos Ltd (ASX: STO) can expect to draw its share of interest.

However, as I wrote in this article, investors must be cautious to compare the scale of the risk-reward trade off (ie, the size of the potential losses/gains) with the likelihood of making a gain. To my mind, a rebound is far from certain in the near term, meaning there is too much uncertainty for oil stocks to make an attractive speculative purchase right now.

BHP Billiton Limited (ASX: BHP) shares lost 1.6% to $18.05 today, likely also as a result of falling oil prices since BHP owns a significant number of oil and gas assets. With both iron ore and oil now trading hands for under US$40 a barrel, it looks as though BHP shareholders can expect much lower profits and dividends in the current financial year.

While today’s fall is modest, I consider there to be a fair chance that shares in BHP could fall further over the next 12 months. In particular, there is a big question mark over global demand for steel, which will have an impact on iron ore and coal markets.

Trustee for AMP Capital China Grwth Fund (ASX: AGF) – fell a hefty 18.5% to $1.18 today on no news, although its benchmark index fell 2.5% in the most recent day’s trade. AMP’s China Growth fund has been bedevilled by a share price that continuously trades substantially below its Net Asset Value – estimated to be around $1.72 per share as of December 22.

Investor perceptions of the risks associated with the Chinese stock market could be partly to blame, although management recently conducted a review into the undervaluation and investors will have to see if it makes a difference.

eCargo Holdings Ltd (ASX: ECG) shares lost 17% today to $0.36 after a bumpy few days following on from its announcement that it had won a contract with Woolworths Limited (ASX: WOW) to operate the latter’s online store on Tmall, China’s largest online marketplace. Shares in eCargo jumped from around 10 cents to as high as $0.44, before again losing some of their lustre today as buying enthusiasm fades. The contract announcement omitted key financial details, making it hard to evaluate just how much of a winner eCargo is likely to be from the arrangement.

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Motley Fool contributor Sean O'Neill has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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