What Happened to Macquarie Group Ltd’s Share Price?
Shares in investment bank Macquarie Group Ltd [ASX:MQG] rose by 3.5% on Friday. The stock handily outperformed an Aussie share market that struggled for direction. It’s a welcome return to form for Macquarie, whose shares investors have sold heavily over the last two weeks.
Why Did This Happen to MQG Shares?
On Friday morning, Macquarie announced net profit after tax of $1.6 billion for the year ending 31 March 2015. That’s up 27% on the previous year — smashing through the guidance Macquarie gave in January of profit up between 10% and 20%.
Solid growth in fees and commissions kept revenue ticking over — equity capital market activity has certainly given the old ‘millionaire’s factory’ a real shot in the arm.
Investors are looking past the softer outlook commentary the company provided with the result and focusing on the here-and-now — a seemingly well-run bank delivering great outcomes for its shareholders.
What Now for Macquarie Group Ltd?
Stocks in the financial sector live or die by the strength of the Aussie economy. That goes even more so for Macquarie. The ‘animal spirits’ that encourage mergers and acquisitions are the same forces that drive Macquarie’s share price.
If you think Australia’s recent spate of initial public offerings (IPOs), mergers, acquisitions, and capital raisings is here to stay, then an investment in Macquarie Group offers you real bang for your buck.
Cheers, Tim Dohrmann
Editor, Money Morning