CBA - Commonwealth Bank of Australia

[farmerge]

Stupidity

Great for those that have been CBA holders for the long term

 

[farmerge]

I think there is alot of fomo going on there. Most expensive bank in the world but that doesn't mean it can't go higher lol.

Do you remember when AMP first floated onto the ASX the SP went ballistic and people put their houses and life savings on it, only to see it go belly up and lose a hell of a lot of precious coin.
Not suggesting that CBA is in the same category, but with the way of the world who knows what the future may drop onto us.

 

[Dona Ferentes]

closed at $168.00 even

And the ️ of the day.

 

[qldfrog]

closed at $168.00 even

And the ️ of the day.

View attachment 197948

Well got 6 months to go below 140 and i will be happy, otherwise my super ETFs will benefit...

 

[Garpal Gumnut]

I cannot understand why CBA still goes up. Trump and the Chinese must be buying it up.

gg

 

[Sean K]

Great for those that have been CBA holders for the long term

I'm inheriting the IPO. (Don't sell yet Dad)

 

[Dona Ferentes]

speculation sells newspapers

,..

Chanticleer

The CBA mystery the whole market’s talking about​

Brokers, analysts, investors and bankers are all scrambling to answer the same question: why did Commonwealth Bank of Australia’s shares surge so dramatically on Tuesday? Three theories stood out.

1. The US buyer​

Richard Coppleson, director of institutional sales and trading at Bell Potter, suggested in his widely read Coppo Report newsletter on Tuesday that a very large US institutional investor has been active in the Australian market in recent sessions, selling out of US stocks (as we are seeing across the global markets at present) and moving into Aussie stocks.
When US investors move like this, Coppleson says, they often buy the banks – and they do not care whether us locals think they are overvalued.

Some veterans on equity desks were sceptical about the “sell US, buy Australia” part of this narrative. But they agreed fingers were pointing offshore, partly because of the huge volumes seen on Tuesday; about 6.3 million CBA shares were traded, compared with the average daily volume over the past 30 days of 2.8 million shares.

Further, large US institutions have been active in bank stocks in recent weeks. A sudden plunge in ANZ shares on March 25 was put down to an offshore broker’s lumpy order going through the market.

2. Flocking to the safest haven​

One of the most interesting features of Tuesday’s CBA surge was the contrast with its rivals. Westpac rose just 0.1 per cent, while NAB and ANZ fell 0.5 per cent and 0.6 per cent respectively.
For one bank watcher, this emphasises that CBA is the safest of the havens in the market. Our bank veteran helpfully provided a list of market pockets where investors currently fear to tread.

• You cannot buy the S&P 500 or the Nasdaq Composite because of the policy uncertainty created by Trump.
• You cannot buy anything positively correlated to China, which rules out the big miners.
• You cannot buy ANZ because of an imminent CEO change and outstanding ASIC concerns.
• You cannot buy NAB because the jury is out on its new CEO, Andrew Irvine, and its CFO, Nathan Goonan, who just departed for Westpac.
• You cannot buy Westpac because it is just beginning an expensive, long-dated and complex IT transformation.
• You cannot buy Macquarie Group because it is not delivering the earnings growth it once did, and it is the bank most exposed to global macro.
• Investors have worries about other giants such as CSL and the supermarkets, and believe premium increases in the insurance sector have probably reached their peak.

3. Going with the flow​

Connected to CBA’s safe-haven status is the idea that it is a magnet for investment flows for different parts of the market.

One such inflow may be coming from Asia, where investors are looking to hide in big, liquid stocks that are not affected by tariffs and where some believe regional investors are still generally underweight CBA.

Another flow is from passive investment. CBA is now a staggering 11.5 per cent of the ASX 200, the next biggest stocks include BHP at 7.9 per cent, CSL at 4.9 per cent, Westpac at 4.5 per cent, NAB at 4.4 per cent, and Wesfarmers and ANZ at 3.6 per cent. So the passive bid remains strong. Once upon a time, active managers would buy or sell stocks that got out of whack, such as CBA. But the theory goes that the orders in the market from active managers are swamped by what one equities desk calls the “transactable liquidity” that passive brings.

Another flow is from the superannuation sector, which came into this year owning about 27 per cent of the banking sector....

...in three weeks, the company delivers its third quarter trading update. The other three big banks deliver their half-year results around the same time.

Those results will confirm what we already know about CBA: it’s the best-run, most dominant bank in the country. That’s very valuable in an uncertain world. But how much more valuable it could or should get is the burning question for investors.

AFR

 

[farmerge]

We have a couple of accounts that are paid monthly and since Bankwest is no longer in some regards we have to have a CBA account to facilitate these payments.
Should have been direct debited and when I checked, from the Bank, Sorry technical issues and we are working on it.
Terrific, rang the bank thieving sods, and asked are we being charged interest because you can't allow the transfer to go through,
Not sure but will get and let you know.
If they do all Hell will hit the branch at Midland.

 

[farmerge]

Still no joy with CBA and their glitch, anyway have been told no interest will be charged to our account.

 

[Dona Ferentes]

against the tide, today . CBA went down 2.5 percent or $4.23 to $163.77.

the other banks were up, about 1 percent

and theory #4

Phil King’s $29bn Regal Funds Management is believed to have waved a white flag on his Commonwealth Bank short position on Tuesday, sparking a massive 4.2 per cent rise in its shares.

Bell Potter’s head of institutional sales and trading, Richard Coppleson said a local institutional investor with a “huge short in CBA” had bought CBA shares to cover that position.

 

[qldfrog]

against the tide, today . CBA went down 2.5 percent or $4.23 to $163.77.

the other banks were up, about 1 percent
View attachment 198034

and theory #4

Phil King’s $29bn Regal Funds Management is believed to have waved a white flag on his Commonwealth Bank short position on Tuesday, sparking a massive 4.2 per cent rise in its shares.

Bell Potter’s head of institutional sales and trading, Richard Coppleson said a local institutional investor with a “huge short in CBA” had bought CBA shares to cover that position.

Would make more sense than actual. Investment by a US fund

 

[Value Collector]

I remember when banks had a dividend yield of about 6% and a pe of around 12.

What's going on here?

View attachment 197943

I remember 8% being the norm for a while in the early 2000’s for CBA

 

[divs4ever]

I remember when banks had a dividend yield of about 6% and a pe of around 12.

What's going on here?

View attachment 197943

it might be a 'flight to safety ' betting the Government would bail out CBA if needed ( or just to big the fail in general )

of course being a very large MC and so-called' sustainable all these funds and ETFs might be just buying market weight

 

[Rypieee]

I wrote the note below, in July 2024. I would be deeply in the red by now.

Commonwealth Bank of Australia (CBA) is the largest stock on the ASX, but we recommend a proxy short position on CBA to track our investment ideas as of 19 July 2024, starting at $131.63. This recommendation is based on valuation concerns, including high price/earnings and price/tangible book ratios, which we find difficult to justify, especially with a deteriorating economic outlook that could impact CBA’s asset quality, such as distressed mortgages. Additionally, potential share capital outflow may occur if the Australian dollar strengthens, and buying support at current prices seems weak, given the traded dividend yield of 3.46%, which is below the RBA cash rate.

Our bearish stance aligns with the broader market sentiment but differs in the timing of the trade. We identify a sticky investor illiquidity premium and indiscriminate buying by ETFs as key factors, with passive index funds becoming net buyers of CBA in 2024, replacing active mutual funds. Retail investors remain hesitant, influenced by capital gains tax concerns and CBA’s unappealing yield, despite the bank’s significant buy-back programs reducing shares by 7% since 2021. Foreign investment in CBA has increased from 12% in 2021 to 17% in 2024, largely driven by active mutual funds, and these investors are exposed to AUD currency risks. Given recent gains in AUD/USD, CBA’s share price, and dividends, totaling about 22%, we question when foreign investors might exit.

Furthermore, domestic risks are easing, and recent positive results from U.S. banks suggest improving asset quality concerns. This could prompt foreign investors, who may have favored CBA over U.S. or European banks for better risk/reward dynamics, to withdraw their capital from CBA in the near term.

In a nutshell, CBA is detached from fundamentals, and guided by capital flow instead.

CBA rally was sparked by fund outflows from China for some years now (my story starts at 2023), APAC mandated funds required to maintain exposure to APAC has to pick the best of the duds. Japan is a potential timebomb - decades in the making. HK now = China. Taiwan = ?? China?? SEA markets too tiny. So lets all slot into ASX.
After that, domestic fundies looking at P/B or P/E or listening to analyst looking at p/e or p/b were thinking, CBA short. They sold.
On the other side of the trade, smarter people at the superfunds accumulated. Super funds now have higher weighting to banks vs domestic. Domestic underowns banks/index. Everytime bank rallys, domestic fund underperforms. Dec-23 came around, domestic FMs began throwing the towel in one by one. They become net buyers (and no one is selling). The more they underperformn, the more incentivised they are to buy CBA and get to net neutral.

Meanwhile, international macro fundies are just sitting tight with their bank holdings. They were suppose to sell, but never saw the catalyst for it. If anything, trump's win = negative China (irregardless of relative positioning of the US post tarriffs). Negative China = more outflows. More outflows with nowhere to go, fighting with domestic fundies trying to get net netural = cba goes up.

Last point. Contrary to many beliefs, CBA is illiquid. 50% of retail holders HODL-ing since age of dinosaurs. Dont want to get CGT-ed by the ATO. have a lot of room to "incur" a decline in the value of their CBA shares, before holding CBA outweights the loss from CGT.

Hopefully easy to follow, was a bit of a brain dump from work i did awhile back.

 

[divs4ever]

I wrote the note below, in July 2024. I would be deeply in the red by now.

In a nutshell, CBA is detached from fundamentals, and guided by capital flow instead.

CBA rally was sparked by fund outflows from China for some years now (my story starts at 2023), APAC mandated funds required to maintain exposure to APAC has to pick the best of the duds. Japan is a potential timebomb - decades in the making. HK now = China. Taiwan = ?? China?? SEA markets too tiny. So lets all slot into ASX.
After that, domestic fundies looking at P/B or P/E or listening to analyst looking at p/e or p/b were thinking, CBA short. They sold.
On the other side of the trade, smarter people at the superfunds accumulated. Super funds now have higher weighting to banks vs domestic. Domestic underowns banks/index. Everytime bank rallys, domestic fund underperforms. Dec-23 came around, domestic FMs began throwing the towel in one by one. They become net buyers (and no one is selling). The more they underperformn, the more incentivised they are to buy CBA and get to net neutral.

Meanwhile, international macro fundies are just sitting tight with their bank holdings. They were suppose to sell, but never saw the catalyst for it. If anything, trump's win = negative China (irregardless of relative positioning of the US post tarriffs). Negative China = more outflows. More outflows with nowhere to go, fighting with domestic fundies trying to get net netural = cba goes up.

Last point. Contrary to many beliefs, CBA is illiquid. 50% of retail holders HODL-ing since age of dinosaurs. Dont want to get CGT-ed by the ATO. have a lot of room to "incur" a decline in the value of their CBA shares, before holding CBA outweights the loss from CGT.

Hopefully easy to follow, was a bit of a brain dump from work i did awhile back.

i am very underweight in the big 4 ( including ETF and LIC exposure ) because in deciding my investment path ( in 2011 ) , i could see no sensible path of growth and i NEEDED some sensible growth ( not just ten-bagger penny dreadfuls )

now IF the market melts-down ( and WBC in particular is very good at dipping ) i have the opportunity of adding some big banks to the portfolio , because all the ETF exposure to the big 4 will create some forced selling at fund manager level

if no melt-down ( in my lifetime ) those boring stocks in the bottom drawer should help me scrape through .

now one interesting catalyst is the proposal to limit/eliminate bank hybrids ( especially the Tier 1 variety ) reducing their access to fairly cheap funds

how will that play out ( more cap. raising via share placements , perhaps )

 

[Rypieee]

Hahah, without going too much into a sector view for banks, and just ranking banks in the now. WBC probably my favourite. ANZ my least. NAB 3rd CBA 2nd.

WBC has the tailwind of operational risk cap overlay being lifted for their AML issues in 2017-18? So lifting the capital requirement = more room to grow the book. And seems like they are looking to break into business lending which is higher margins vs retail/insto. Not easy, but when you look at WBC working for the higher % profits, and CBA/NAB at risk of losing their higher % profits. The optics are better for the former, even from a % chg perspective to bank PP Op. earnings. Plus, WBC cheaper, WBC hungry, and WBC fighting from underdog position.

AT1 capital actually quite expensive to the banks haha, but a price they are willing to pay, because it solely covers CET1 risk/bank runs. Taking it away introduces more of a spread out in risk to other instruments of funding. In such case, a debt buyer of a bank, who normally buys senior because partly, lower risk premium to credit risks, will now demand a higher risk premium for credit risk. Therefore, cost of funding goes up on the wholesale (ex-AT1) front.

 

[Dona Ferentes]

.

Last point. Contrary to many beliefs, CBA is illiquid. 50% of retail holders HODL-ing since age of dinosaurs. Dont want to get CGT-ed by the ATO. have a lot of room to "incur" a decline in the value of their CBA shares, before holding CBA outweights the loss from CGT..

the meteor will wipe you lot out, too.

 

[qldfrog]

the meteor will wipe you lot out, too.

Mr DF,
I thought you were a fan of CBA tegardless of SP and the quote post goes your way so i am a bit lost.
Are you now a CBA bear, should I open a club?
With labour probably winning at the election, the local politics of more taxes and less critical thinking/ economics is probably a plus for CBA.they will not rock the boat with their mate
I just base my 6 month short play on global monetary issues which Australia will not be isolated from.

 

[Dona Ferentes]

Mr DF,
I thought you were a fan of CBA tegardless of SP and the quote post goes your way so i am a bit lost.
Are you now a CBA bear, should I open a club?
With labour probably winning at the election, the local politics of more taxes and less critical thinking/ economics is probably a plus for CBA.they will not rock the boat with their mate
I just base my 6 month short play on global monetary issues which Australia will not be isolated from.

no , I'm one of those long term holders. and happy.

I have held a lot of different companies over the years. Most I've sold but a few I have held for for the long term.

Mr Rypiee seems to view CBA differently.

 

[Dona Ferentes]

and a push to a new high ...$169.27

Are you now a CBA bear, should I open a club?
.... more taxes and less critical thinking ...
I just base my 6 month short play on global monetary issues which Australia will not be isolated from.

you may have missed the aim of my retort ... an earlier poster called early investors in CBA "dinosaurs". He then mentioned good reasons why they don't sell.

If there is a market crash (meteor) then he won't survive the impact, either.