ASX's biggest stock is tipped to make $10.3b. Will it be enough for investors?
The biggest stock on the sharemarket, CBA has had a stunning rise. The stock has soared 37 per cent in the past year, far more than rivals, as investors piled into the bank's shares as a way of gaining exposure to Australia's economy during a time of global volatility.
The surge means CBA's market value easily eclipses that of its two nearest rivals, Westpac and National Australia Bank, combined. Analysts almost universally say CBA shares are overvalued.
The Sydney-based bank comprises about 12 per cent of the ASX 200, and its result will be a key event for sharemarket investors this week, as well as providing an important bellwether for the local banking sector and the wider economy. Investors say there will be little margin for error for the bank's results, which will be delivered by chief executive Matt Comyn on Wednesday.
Analysts expect CBA's first-half profits will increase to about $10.3 billion, up from $9.8 billion last year, and investors are likely to pore over its profit margins and any sign of a worsening in its loan portfolio.
Opal Capital chief investment officer Omkar Joshi said much of the buying of CBA shares, which had inflated the stock price, was not driven by the bank's performance.
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Instead, analysts have suggested the share price has been inflated by super funds and offshore investors buying the stock as a bet on Australia's economy during a period of global volatility.
Even so, Joshi said that when share prices were high, it meant there was generally less margin for error, adding this was the case across for other highly valued stocks on the ASX as well.
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