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With some rattled by the Commonwealth Bank (ASX:CBA) decline of over -5% on Wednesday (as at lunchtime trades AEST), the question is on many minds – is this the start of a probably overdue correction for CBA?
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I don’t really see that being the case, though clearly, the price action on Wednesday does give room for pause.
Where CBA recently passed the $300 billion market cap mark, at lunchtime on Wednesday, it now boasts a market cap of $283 billion. Still pretty massive, but of course, notably lower than $300 billion.
Still, many brokers and analysts believed $300B was a nonsense number anyway. (According to public data, not a single broker currently rates the stock a Buy.)
That’s even as the bank’s NIM increased by 9bps on FY24.
But perhaps what was most off-putting for investors on Wednesday is Commonwealth’s OpEx costs have jumped +6% vs FY24, and they’ve even climbed +4% vs 1H25. That’s something to keep an eye on.
Correspondingly, by way of being the largest stock on the ASX, its sharp decline has also brought down the ASX200 -0.46% (as at 1pm) but not enough to shake us out of the 8,800s – a range we only recently arrived upon.
And while CBA now sits at a market cap of $283B, it’s well above the second-largest stock on the ASX, BHP (ASX:BHP), which has a market cap of $211B.
I don’t expect BHP to overtake CBA anytime soon, though whether or not CBA can return to a $300B threshold anytime soon remains to be seen.
But it’s hard to imagine that outcome is impossible. After all, uncertainty is still the name of the game, and as much as investor reaction to the annual report of Australia’s largest bank, CBA, remains one of the safest stocks in this entire quadrant of the planet to invest in.
In many ways, it’s kind of like an ASX stock equivalent to gold. The bank’s share price is widely perceived to be the beneficiary of FDI outflows from China and the U.S. in recent history.
Profit-taking on Wednesday is also something to consider. On the same day the RBA cut rates for the third time this year (Aug. 12), the ASX200 clocked a new record high of 8,800pts – a feat which will always lead to many people skimming off the top.
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And with another interest rate locked in and a general risk-on vibe becoming palpable, I expect we’ll see a lot of dip-buying for CBA in the days (and weeks?) ahead.
CBA last traded at $169.93/sh.
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