25/05/2016 - 06:23

Is it time to short Australian banks?

25/05/2016 - 06:23

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There is growing speculation that Australian banks are vulnerable…. Growing bad and doubtful debts, weak net interest margins and a property market that looks “shaky” is putting pressure on banking stocks. Global hedge funds are benefiting from this trade by increasing their net-short positions by over 18x, the highest on record… yes, even greater than the GFC… so do we agree with them? In part, yes…. We feel that bank cash earnings will remain “flat” to “negative” over the next 6-12 months and we are concerned about banks’ exposures to the small-cap junior mining and oil companies…. We also feel that banks will not be able to pay their dividends, driving share-prices lower… red alert?

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