Brokers, with a few exceptions, have rated banks 'hold' or 'underweight' - but the share prices keep going up
Brokers, with a few exceptions, have rated banks 'hold' or 'underweight' - but the share prices keep going up. Current and forecast price-earnings ratios, price/earnings growth ratios, price-to-book ratios and all the other conventional measures of the four big banks are, by historical standards, expensive. Yet the banks' values keep increasing. There are a few key reasons that the prices in the banking sector are going up contrary to the analysts' expectations based on the conventional financial metrics. These are 1) The consistent flow of capital into the Australian share market 2) The behaviour and future needs of investors in the market 3) The 'risk' of bank share investing has been nullified by government intervention. The superannuation guarantee ensures that each year 9.25% (9.5% from July) of each worker's salary is invested. A large percentage of this money is invested in domestic equities. Full report here: (VIEW LINK)
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