So the net impact so far of the budget liability levy was to knock over $16 billion in market value from the big four, which is more than their most recent combined profit! ANZ fell the most, at 5%, followed by Westpac 4.3%. Macquarie dropped 2.5%.
They have reported a combined $15.6 billion in the half, and up on average more than 6%. Here is the ASX 200 Financials chart for the past 5 years. They are still fully valued.
Given the overall market index was little changed, the majors are perhaps out of favour. What is not clear yet is whether this is a knee-jerk reaction to the budget “surprises”, or whether the tighter supervision, slowing home lending and rising consumer delinquencies are the root causes.
We think investor home lending is set to slow considerably in the months ahead. The question is how home prices will respond. As a result, the growth engine for the majors will be potentially misfiring. Given the concentration on the local markets, and focus on housing lending, they do not have many other shots in the locker.
