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Commonwealth Bank (ASX:CBA) has quietly staged an (almost complete) return to having a market cap of A$300 billion, reiterating its stance as the most expensive bank stock in the world and once again reminding investors that we are a “Mag Two” market with CBA, and then of course, BHP Group.
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As at 1.40pm AEDT, CBA’s market cap is A$296.7B (so not quite a solid $300B). But compared to two months ago, when the materials rotation was thought to be manifesting, the cap has quietly been creeping back up.
It wasn’t long ago that CBA’s cap dipped below $280 billion.
But in what has been a fairly dismal week for the XJO, that whiplash triggered by the flurry of geopolitical macro events we’ve seen in the last fortnight, what can we deduce from the fact that CBA’s market cap is quietly creeping back up?
The answer is a flight to safety: It’s probable foreign inflows are pouring back into Commonwealth. That’s what they did all year after April 2 triggered the ‘Sell America’ momentum, and of course, the call’s coming from inside the house, too – all the other banks, investment banks, superfunds, and high net wealth traders here at home love to buy Commonwealth too.
That’s because the big four bank is basically the Australian equity equivalent to bullion. And so in that way, it’s obvious what that means – investors are looking for the safest place to put money in Australian equities, and that’s because the mood in the room down under is currently more bearish than it is bullish.
Indeed, the U.S. is experiencing the same thing, and of course, that’s bleeding into Australian investor psychology. In fact, the ‘fear gauge’ has been on the fear side of things in immediate history. And right now, it’s actually dipped into “extreme fear.” Even with tech earnings keeping the party going.
The question is: Can the U.S. market continue to stage a gravity-defying rally into the next year? It’s far more likely the Americans can pull that off than the Aussies. Our other big ‘Mag2’ stock, BHP, remains the subject of inquiries around Chinese iron ore orders; in the background, Simandou continues to loom large.
Let’s hope this isn’t the case, but right now, looking at CBA’s market cap and the fear index – we might miss out on a down under Santa Rally in 2025, too.
CBA last traded at $177.39/sh.
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