With the local market following the lead of US markets and sinking lower today, a good number of sectors have sunk into the red.
One area of the market which has fallen more than most is the medicinal cannabis industry.
Here is the state of play in the industry at the moment:
- The Auscann Group Holdings Ltd (ASX: AC8) share price has fallen almost 3% to $1.61
- The Cann Group Ltd (ASX: CAN) share price is down 4.5% to $3.12.
- The Creso Pharma Ltd (ASX: CPH) share price is lower by 4% to 99 cents.
- The Hydroponics Company Ltd (ASX: THC) share price is down 3.5% to 82 cents.
- The MGC Pharmaceuticals Ltd (ASX: MXC) share price is off 4% to 11.5 cents.
- The MMJ Phytotech Ltd (ASX: MMJ) share price has dropped 3% to 50.5 cents.
While Cann Group’s decline could be related to its quarterly update released this morning, I think the main catalysts for these declines have been a combination of profit taking and investors going into risk-off mode following a sizeable drop in US equities.
After all, Australian medicinal cannabis shares have been some of the biggest movers on the market since the start of the year. The AusCann share price, for example, has more than doubled in value in 2018 even after a series of notable declines over the last few days.
And with so much future growth built into their shares already, they certainly are some of the most high risk shares on the market.
Should you buy the dip?
While one of two of these shares could go on to have extremely bright futures, at this stage it is a little hard to know which ones will be the winners and which will be the losers.
So for now, investors may be better off focusing on other areas of the market until it becomes clear just who is going to be the market leader in Australia.
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As of 2.11.2020
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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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