Australian Investment Blog

**CBA reported slightly above analyst’s estimates this morning, with 1H Cash profit at $4.8B**

Yesterday $40bn was wiped off the Australian share market with the "Big Four Banks" spearheading the decline - the banking sector fell 4.7% compared to a 2.9% fall in the ASX200. The selling which washed through the local market was simply unrelenting, with much of Asia closed for Chinese New Year poor Australia is likely to have encountered more of the regional selling than is typical. Hence as a short term side thought, the local market may be an outperformer early next week when the rest of Asia returns to business after a week of welcoming in the year of the monkey. Importantly it's not just Australian banks that are having a tough time at present - the local banking index has corrected 29.7% compared to the US S&P500's banking index falling 27%. When we consider the combination of large capital raisings that APRA basically forced our large banks to undertake and are economic ties with troubled China it's no surprise that local banks are slightly worse off. Medium term the extra capital that our banks raised at what is currently very attractive levels should help their stability in any troubled times ahead e.g. In 2015 ANZ raised $2.5bn from institutional investors at $30.95 compared to yesterday's close of $22.79. However, short term as we are witnessing at present fresh buyers have been removed from the local banks after being "stuffed" with stock at bad levels! It should be noted that at present both Australian and US Banks have only corrected to the same degree as in 2010-2011.