Investors have flocked to CBA ahead of its half-year results, but will the bank live up to the lofty expectations implied by its record share price? Investors weigh in.
Commonwealth Bank hit a record high of $111.43 on the ASX on Friday as shareholders pile into Australia’s biggest lender before what analysts believe will be a bumper half-year result.
Mr Dive believes the CBA stock deserves to trade at a premium to its rivals because it typically boasts lower loan losses and a higher return on equity. “The portion of foreign buyers of CBA stocks has gone up significantly in the last three to six months,” said Jun Bei LiuThere are stock-specific reasons for its outperformance, too. The extension of Commonwealth Bank’s rally into the new year can be attributed to short-term buying before what is projected to be a terrific interim profit.
This is usually followed by a period of selling leading into a bank’s ex-dividend deadline – the cut-off date to buy a stock and still be entitled to receive its declared dividend – as passive flows switch into other bank stocks on a different reporting cycle.“I expect there will be a bit of a rally into the result and a few days before the ex-dividend date there will be some weakness,” she said.
“We’ve already seen many leading indicators of listing volumes, and mortgage application volumes being down significantly, and if anything, there’s still further weakness to come through.”
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