Hot demand from offshore and local institutional investors has been driving up the share price of the country’s major lenders, Jarden analysis shows.
Mum and dad investors are reducing their stakes in the country’s big banks, taking the level of retail shareholder ownership to a record low, even as hot demand from institutional money sends bank stock prices higher.
“Anecdotal industry feedback suggests the recent increase in offshore buying in CBA is more driven by index funds rather than active asset allocation away from Asia, but this is difficult to conclusively validate,” Jarden’s Jeff Cai said.Tribeca Investment Partners portfolio manager Jun Bei Liu said it made sense for global investors – who wanted to allocate their money to a stable economy in the Asia-Pacific region – to increase their exposure to CBA, a large component of the ASX 200 index.
While retail investors reduced their holdings, Australian investment managers were still buying bank shares. NAB was a favourite among the big banks, with its domestic institutional ownership at a 13-year-high. In contrast, Westpac had the least share of domestic institutional ownership at 26.2 per cent.
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