Australia’s CBA attracts funds leaving China despite profit outlook

Australia’s largest bank, Commonwealth Bank’s (CBA) stock surged 20 per cent since November, driven by investors moving away from China’s struggling markets and shifting to equities in anticipation of interest rate cuts, Reuters reported on Monday.

Commonwealth Bank is expected to report a slight decrease in first-half profit this week. However, this hasn’t stopped investors from flocking to its shares, making it one of the world’s most expensive banks.

As the market’s second-largest stock, CBA is attracting a significant portion of the money flowing into Australian equities from both domestic and international investors, according to analysts and investors.

As a result, CBA is currently trading near its all-time high, with a valuation of 21 times forward earnings per share. This is nearly double the earnings multiple of Wall Street giant JPMorgan and more than triple that of HSBC.

Investors seeking safe and liquid investment options amid China’s market challenges have turned to Australian banks, with CBA being a particularly popular choice due to its size and reputation, according to a portfolio manager at Wilson Asset Management.