The financial sector took another beating as investment banks bore the brunt of investor nervousness.
The Australian market took another pounding yesterday following more pain in US markets last Friday.
The All Ordinaries dropped 106.4 points (1.76 per cent) to 5,949.5 while the S&P/ASX 200 retreated 100.8 points (1.67 per cent) to 5,920.2.
The banks and financial sector fell 1.6 per cent. Macquarie shares sunk a further 6.6 per cent, taking its drop to 15 per cent since Macquarie notified the market of its exposure to the US sub-prime mortgage sector.
Macquarie advised investors yesterday that it had realised US$6 million in losses, or around 5 per cent of the aggregate value of Macquarie Fortress Notes.
Macquarie Fortress's manager, Four Corners Capital management, has reduced some of the leverage in its portfolio by selling off US$133.4 million in senior secured loans since June 30. Senior loans fell 4 per cent in July; double the previous worse result in September 2001.
As of August 3 the senior loans portfolio had a face value of US$655.6 million.
A Macquarie note to investors said that the manager had no concerns that the loans in the portfolio would not continue to pay periodic interest and repay the principal outstanding at par.
The fund also advised that, as yet, it had not been subject to margin call.
Fellow diversified financials MFS and Babcock & Brown dropped 4.6 per cent and 4.1 per cent respectively, while Challenger slumped 5.7 per cent.
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