National Australia Bank Ltd. (ASX: NAB) shares and some of its ASX Financials compatriots are trading at 52-week lows.
Why are shares like NAB under pressure?
It’s been a tough start to March for the Aussie banks with the S&P/ASX 200 Financials Index (INDEXASX: XFJ) now down 9.60% lower since the start of the year.
NAB shares are down 10.68% this year and closed last week at a 52-week low of $22.00 per share. While fears over the coronavirus outbreak spooked investors, it was the Reserve Bank of Australia (RBA) interest rate cut that sent ASX banking shares plummeting lower.
It’s not just the big four banks that are under pressure right now. The Bendigo and Adelaide Bank Ltd (ASX: BEN) share price has fallen 20.45% lower to a 52-week low of $7.78. Shares in the regional banks have been under pressure for quite some time now. Low interest rate environments can make it hard for banks to make money, and the logic is that if the big four banks are set to struggle, the non-major banks may be hit even harder.
When the RBA cut rates by 25 basis points to 0.50%, the banks felt the pressure and passed on the cuts to consumers, which means that they’re now lending at lower rates and that can squeeze profit margins. It’s the same story for Bendigo, which is why they’re also falling alongside NAB shares in March.
However, there are other parts of the Financials sector under similar pressure. The NIB Holdings Ltd (ASX: NHF) share price is at a 52-week low of $4.26 per share right now. NIB shares are down a whopping 32.06% since the start of the year as the insurance sector feels the heat.While NAB shares are suffering from low interest rates, the private health insurance sector is experiencing some margin squeeze of its own.
It’s been a tough fortnight for shares like NAB and there are at least 10 ASX 200 shares trading at 52-week lows. While this could be a sell-off based on fundamentals, it could also represent a good buying opportunity.
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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of National Australia Bank Limited. The Motley Fool Australia has recommended NIB Holdings Limited. 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 Scott Phillips.
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