Australian Banks and short term bearish equities outlook

The Casual Link to Opportunity

Australian Banks and short term bearish equities outlook

22 November 2018 Analysis ASX Equities AUD Australian Politics Fundamental Analysis General thoughts Housing Market Macro-economics Property investment 0

The banks are still reporting high profits, but you need to look beyond the headline figures and consider the cash profits. These are down and its no surprise.

Australian Banks are in for some choppy times:

  • Falling sustainable bank cash profits.
  • Bank asset sales -sell off in insurance, wealth advice and superannuation.
  • Hayne Royal Commission – bad press.
  • Decline in credit growth.
  • Macro-prudential tightening.
  • Rising global interest rates.
  • Less foreign capital flowing in.
  • Falling Australian Dollar.
  • Falling property prices.

Its no surprise that bank equities prices are falling. Lots of headwinds and few tailwinds.

We have previously written on what will be the bear indicators in the Australian housing market. These red flags are now flying. Slow down in immigration, slowing credit growth, fall in investment loans. fall in interest only loans and decline in foreign sourced funds. This flows on to banks that derive a lot of profit from the housing market.

So long as the banks maintain a sticky dividend policy, and you are in for the long term, you might decide to hold. But if you have fears of capital loss, then its likely not a good time to be buying Aussie Banks. Wait six months, see what happens with the next federal election and see how the economy is doing.

-Casual Trader

 

This is not financial advice. See our Disclaimer.

Leave a Reply

Your email address will not be published. Required fields are marked *