Yesterday, MQG completed a $500m capital raising at $73.50 (a 2c discount to the previous day's close)

Nicholas Forsyth

Market Matters

Yesterday, MQG completed a $500m capital raising at $73.50 (a 2c discount to the previous day's close). Compare this to the discounts investors demanded when optimism was a distant memory: CBA 2008-raised $1.65bn @ $26, a 12% discount. MQG 2009-raised $540m @ $27, a 22% discount. WPL 2009-raised $2.5bn @ $42,10 a 9.4% discount. The market's confident of the future than during the dark GFC days, with the $US10Tln of Central Bank stimulus arguably the main contributor. I believe the Central Banks still have not succeeded in stimulating world growth, but have created a bond-bubble that will need incredible efforts to avoid a harmful burst. In the short term, I believe the stimulus/free money will continue to inflate asset prices and the ASX200 can easily see the 6200 area. MQG is perceived to be perfectly-positioned at present, with corporate activity increasing, aided by the near-zero-cost of money. The only factor that investors must remember is that you cannot forecast MQG's earnings with any large degree of confidence, it's more of a macro-environment play and low-interest-rates, plus asset inflation are positive conditions for a merchant bank. (VIEW LINK)


Nicholas Forsyth
Nicholas Forsyth
Director
Market Matters

Market Matters is an online investment and share trading advisory service designed for those that want to take their wealth further. We specialise in advice for active share market investors, including those new to the markets or those with a Self...

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