You know you’re in a bull market when a company sets out to borrow $750 million dollars and appears to have asked for to little. Macquarie Bank held out its hand to private investors seeking around $750 million to finance new asset purchases. What it got was more than it expected. The private placement of new shares, 8.62 million of them to be exact, was priced at $87, and that, apparently is a bargain.
MacBank is the Goldman Sachs of Australia, an asset manager/hedge fund that’s head and shoulders above the rest, both in profits and audacity. The company is headed toward $1.6 billion in profits. The shares are headed to $100. Even the other investment banks-UBS, ABN Amro, and J.P Morgan-fawn over MacBank’s shares. Curiously, only rival Goldman Sachs thinks Macquarie’s shares are fully valued at the current price.
Not knowing enough about the quality of Macquarie’s assets, we don’t have much to add about whether the stock is fully or fairly valued at today’s prices. But you learn something about a stock market whose crown jewel is an investment bank. As we’ve pointed out in the past, it’s the financial stocks that have driven over 40% of the earnings growth on the S&P/ASX 200. For all the talk of the big miners, it’s the big money lenders who’ve powered Australia’s share market. And if that isn’t the sign of a market in the grip of a financial boom, we don’t know what is.
Markets and Money