Investors warned on bank exposures
Australian banks have been assessed as conducting a rather expensive and senseless exercise by paying large dividends and issuing new shares at a time when the regulator judges them to have too little capital.
That is the assessment Henderson Global Investors head of global equity income, Alex Crooke, who was discussing the outcome of the Henderson Global Dividend Index which pointed to global dividends rising by 2.3 per cent year-on-year in the third quarter but with Australian dividends falling 3.1 per cent year-on-year, mainly due to the fall in the Australian dollar.
The Henderson Global Investors analysis pointed to Australian investors being too exposed to the fortunes of the banks.
"Australia's banks make up over two-fifths of the country's total dividends, making Australian investors far more dependent on dividends from the banking industry than any comparable market," it said.
As well, Crooke pointed to a combination of Australian investors' exposure to the banks but also to China.
"Not only is Australia more exposed than most of its peers to China, but heavy dependence on bank dividends leaves Australian investors with a large exposure to just one sector," he said.
"Many Australian banks are judged by the regulator to have too little capital, so paying large dividends at a time when they are issuing new shares in the market is a rather expensive and senseless exercise," Crooke said.
He claimed that for Australians more than most, thinking global would help diversify the risks away.
Recommended for you
Clime Investment Management has faced shareholder backlash around “unsatisfactory” financial results and is enacting cost reductions to return the business to profitability by Q1 2025.
Amid a growing appetite for alternatives, investment executives have shared questions advisers should consider when selecting a private markets product compared to their listed counterparts.
Chief executive Maria Lykouras is set to exit JBWere as the bank confirms it is “evolving” its operations for high-net-worth clients.
Bennelong Funds Management chief executive John Burke has told Money Management that the firm is seeking to invest in boutiques in two specific asset classes as it identifies gaps in its product range.
