Shares in Australia’s third-biggest bank, Australia and New Zealand Banking Group Ltd [ASX:ANZ], slid by 2.15% today in another risk-averse session on the Aussie stock market.
At $31.43, ANZ shares have slid to a six-month low…down 10% from April’s all-time high.
This may alarm share investors who bought ANZ over the past year expecting bulletproof yield and capital growth.
When the share price of one of Australia’s big four banks moves, the other three tend to move in a similar direction.
The market whacked all four big banks today…so in a broad sense, the price action shows that investors are viewing bank stocks’ multi-year golden run as overplayed.
Free Reports:
That’s certainly been the theme of the past few weeks.
I’m hearing increasing chatter that investors expect US interest rates to rise next year. This would reduce support for the ‘yield trade’, where investors bid up bank stocks and other ‘blue chips’ coveted for their dividends.
Some investors also believe that the stock market won’t cope if and when central banks slow down or stop pumping so much money into the economy.
Those two big-picture trends have weighed on all four big Aussie bank stocks lately.
ANZ’s larger exposure to the Asian markets means it should outperform in times of benign economic growth…and suffer more when the market hits patches of risk aversion. That seems to be why the ANZ share price has lagged its peers and the market today.
Much like its three fellow pillars of the Aussie banking system, ANZ has enjoyed a fantastic share price run over the past two years.
That reflects more than just a ‘rising tide’ of stock market bullishness. ANZ’s profits are ramping up thanks to a well-planned strategy for domestic and international growth.
The best time to buy bank stocks is when fear and uncertainty overwhelm the market. That’s why if ANZ shares drift closer to the $30 level they broached back in February, I’d view this big dividend-paying stock as too cheap to ignore.
Cheers, Tim Dohrmann+
Small-Cap Analyst, Australian Small-Cap Investigator
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