South32 (S32) awoke from its slumber yesterday’s advancing +4.5% but overall ANZ and S32 have largely danced in sync over the last 18 months as CBA enjoyed the bulk of the aggressive momentum in flows, the same “weak longs” that’s likely to see the bank lead any further weakness across the banking sector.
- S32 – We are initially targeting the $3.50 area, or another 15-20% higher.
- ANZ – We are not as clear on ANZ as it has lagged the banking sector, but we cannot see it rallying if CBA falls another 6%.
ANZ remains our preferred bank, but we have no plans to increase our exposure at this stage. While we like S32, MM is already overweight the resources, making it unlikely we will buy S32 unless it’s part of a switch.
- We can see S32 outperforming ANZ by at least 10% over the coming weeks/months, but in this case, it’s primarily because S32 looks poised for another leg higher.
MM prefers S32 over ANZ in the coming weeks/months
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