All trading involves risk. Losses can exceed deposits.

Macquarie update already factored in

Macquarie released its September market outlook statement today with an almost ‘nothing to see here’ report.

All trading involves risk. Losses can exceed deposits.

The update is consistent with the statement released at the annual general meeting on July 25. The expectation then, as it is now, was for the first half of 2014 to be ‘broadly similar’ to second half of 2013; which has been a strong period. MQG also suggest, as with most yearly trading cycles, the second half of 2014 is expected to be stronger again as trading and lending optimism gains further momentum.

This is not new and the forward expectations given are conditional on ‘continued conservative cost initiatives and funding arrangements’. Since being decimated by the GFC, MQG’s structure has been under constant change; having had a horizontal management structure with a vertical staff set up left the company venerable, meaning cost cutting and staff changes were necessary.

The company has worked very hard over time to correct this structure and this year’s results are starting to show signs that this change is working. However, the more pressing issue for MQG share price isn’t company news, it’s fundamental valuations.

At near A$50 a share, MQG appears very expensive. Earnings per share are shrinking, coming in around 3.15 a share and its forward price to earnings ratio of 15.9 times earnings is a price most fundamental investors won’t pay. This suggests the technical resistance of $50 is now double-blessed by the fundamental resistance, with a P/E well above excepted levels.

MQG could be due for a pull back.  

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