Australian Banks and the Widow-Maker Trade?

On Monday a Swiss friend was bemoaning the dramatic fall in the share prices of Credit Suisse and UBS. Indeed in terms of market cap UBS, CS and Deutsche Bank combined were worth slightly more than Commonwealth Bank. Despite working in finance, the Swiss friend has not heard of this Australian bank.

Probably the biggest question that any Australian equity fund manager faces is what weight in a portfolio to allocate to the banks. Over the past few years, the Australian banking sector has grown to represent 31% of the ASX100 on the back of record bank profits, weakness in other sectors and a chase for yield by investors globally as monetary policy settings across Europe, Japan and the US have pushed interest rates to multi-century lows. All of this has contributed to all 4 of the Australian banks now being in the top 15 banks globally by market capitalisation, despite their relative lack of importance in the global financial system. In this week’s piece we are going to look at the change in banks over time.

Click here to read.

Join Our Mailing List

Receive the latest investment funds news from Aurora delivered right to your inbox

SIGN UP HERE