The sub-prime mortgage crisis is still claiming victims, with the major US banks suffering billions of dollars of losses. Australian banks, on the other hand, have so far avoided the massive write-downs, though they have been coming under pressure from higher funding costs.
The sub-prime fallout news has, unsurprisingly, directed focus towards the recent results in the banking sector. National Australia Bank recorded better than expected first half profits, and Westpac produced solid revenue growth; both actions bolstering confidence in the banking stocks. It also seems the results released to date are yet to include any surprise losses, an aspect many investors may have factored in.
M&A activity has also put the sector back in the spotlight. Westpac stunned the market with news it was in talks with St George Bank for a bold all script bid for St George. A takeover by Westpac of St George would create Australia's biggest bank ahead of Commonwealth Bank. The Government's four pillars banking policy prevents the big four banks - Australia & New Zealand Banking Group, Commonwealth Bank, National Australia Bank and Westpac from merging with each other. Riding on the coat-tails of the St George bid are the likes of the Bank of Queensland and Bendigo & Adelaide Bank, both of which have seen renewed interest amongst investors.
Take a view on the banks
As well as access to individual Australian banking stocks and banking stocks from the US, UK and Europe, IG Markets also offers trading over the Financials sector. Trading a sector allows you to take an industry-based view on related stocks rather than basing your trade on a specific company.
With CFD trading you can profit whatever the fortunes of the stock or the sector: if you think the banks have seen the worst of it you could 'buy', while if you believe there are surprise losses to come you might choose to 'sell'.
The above comments do not constitute an investment advice and IG Markets accepts no responsibility for any use that may be made of them.
19/05/08