Banks in focus – who is buying, who is selling

What a difference a week can make! With reporting season beginning in earnest and some of Australia’s largest companies delivering annual or half yearly updates, the ASX has shrugged off January’s wobbles and surged 3% in the last 5 days. Over the same period, the S&P500 is largely flat.

Investors have lost their passion for financials over recent years, with the proportion of the average nabtrade portfolio allocated to banks falling from roughly 35% to around 25% over the last decade. Many more mature investors will recall three of the big four banks trading above $35, and have been disappointed by the performance of nab (NAB), ANZ (ANZ) and Westpac (WBC) which remain well off their ten year highs. Commonwealth Bank (CBA) is the standout, having climbed 100% over 10 years, as well as providing a generous dividend, but a worrying quarterly update in late 2021 saw it fall more than 10% from its high of $110. This week, CBA was back to impressing the market, with a half yearly update that beat analysts’ expectations. Net interest margin, the key metric that worried investors in October, has fallen 14 basis points, but all other metrics were broadly positive, and holders were rewarded with a 17% increase in the dividend, along with an additional share buyback of $2bn. CBA’s share price bounced 5% on the news; nabtrade holders took profits.

Commonwealth Bank share price over 12 months (CBA)

Source: nabtrade

Thursday saw nab (NAB) deliver its first quarter results, which also impressed the market and resulted in a 4.5% uplift in the nab share price. Nab remains the largest shareholding on the nabtrade platform, and many investors have been waiting for an opportunity to trim their positions, resulting in huge sell volumes on the day. Interestingly, Westpac (WBC) has been the standout buy for nabtrade investors for more than twelve months, purchased in significantly greater volumes than the remainder of the big four given its underperformance and potential for a re-rating. Westpac shares only rose 2% on its quarterly update last week, but it has since risen with the remainder of the sector to be sold off around $22.50. ANZ was a long way down the trading volumes, also a sell.

Also in the financials sector, former blue chip AMP (AMP) delivered its full year results on Thursday, bouncing an impressive 6% on the announcement of a 53% uplift in underlying net profit – and a rebrand for its Private Markets business. Overall however, the company announced a statutory NPAT loss of $252m, primarily due to non-cash write downs, and no final dividend. Nabtrade investors ignored the news; the stock failed to make the top 20 most traded companies on Thursday.

AMP shares over twelve months (AMP)

Source: nabtrade

At the same time, high profile fund manager Magellan Financial Group (MFG) fell off a cliff last week with the announcement of Chief Investment Officer Hamish Douglass’ indefinite medical leave from the firm. The stock has since bounced more than 10%, giving nabtrade investors an opportunity to lock in profits from buying the dip – or limit their losses. The stock is down over 60% over twelve months. 

Travel stocks Qantas (QAN), Webjet (WEB) and Flight Centre (FLT) have all enjoyed a healthy bounce on the announcement of Australia’s borders reopening from 21 February. All three stocks were top 10 buys on nabtrade during the Covid collapse in the first half of 2020, and many investors have taken profits this week.

On international markets, Meta Platforms (formerly Facebook, FB.US) had a widely publicised 25% share price collapse on slowing growth and extraordinary costs associated with the company’s push into the ‘metaverse’. Nabtrade investors, who’ve previously been somewhat indifferent to the stock, have shown a great deal of interest, bumping Tesla (TSLA.US) off the most bought list for the first time in three years. Average trade sizes are below $AUD10,000 however, suggesting only modest interest or smaller investors willing to take a punt on the social media giant’s fortunes.

Meta Platforms share price over 12 months (FB.US)

Source: nabtrade

Analysis as at 10 February 2022. This information has been provided by WealthHub Securities Ltd the ASIC Market Integrity Rules and a wholly owned subsidiary of National Australia Bank Limited ABN 12 004 044 937 AFSL 230686 (NAB). Whilst all reasonable care has been taken by WealthHub Securities in reviewing this material, this content does not represent the view or opinions of WealthHub Securities. Any statements as to past performance do not represent future performance. Any advice contained in the Information has been prepared by WealthHub Securities without taking into account your objectives, financial situation or needs. Before acting on any such advice, we recommend that you consider whether it is appropriate for your circumstances.