The banks have dominated the news in recent sessions, with significant weakness unfolding in Bendigo (BEN), National Australia Bank (NAB), and Westpac (WBC). Conversely, our positions in ANZ, Macquarie (MQG), and CBA, across our Active Income and Growth Portfolio’s, have held firm at this stage. This morning, we’ve considered our MQG position in our Active Growth Portfolio. As we said earlier, “We can see MQG rotating in the $220-$250 area through 2025.” Hence, if a deeper pullback unfolds in WBC or premier brand CBA joins the sell-off party, we will consider tweaking our banking exposure.
If the elastic band stretches further between MQG and WBC or CBA, we will consider switching to one of the “Big Four” alternatives. The correlation between MQG and WBC is strong, making a short-term period of underperformance attractive. Note that we didn’t include NAB this morning as we’re still concerned about their business banking risks, and see WBC as better placed.
- We feel WBC will look attractive compared to MQG if the differential hits the ~$203-4 area – MM owns MQG in its Active Growth Portfolio.
MM is watching for switching opportunities from MQG
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