Trending Now
Rubio announces visa revocations on Brazilian judge for ‘political witch hunt’...
Justice Department moves to unseal Epstein, Maxwell grand jury transcripts amid...
Trump says 10 hostages will be returning from Gaza ‘very shortly’...
EPA announces 23% workforce reduction and closure of research office as...
Microsoft ends use of China-based computer engineers for certain Defense Dept...
‘Get a job’: Medicaid work requirements included in Trump’s megabill sparks...
US visa bans on Brazilian judges spark diplomatic rift, cloud economic...
Trump has now been in office for six months, for the...
Slovenia approves law to legalize assisted dying for terminally-ill adults
Heritage Foundation founder Edwin J. Feulner dies at 83
Rubio announces visa revocations on Brazilian judge for ‘political witch hunt’...
Justice Department moves to unseal Epstein, Maxwell grand jury transcripts amid...
Trump says 10 hostages will be returning from Gaza ‘very shortly’...
EPA announces 23% workforce reduction and closure of research office as...
Microsoft ends use of China-based computer engineers for certain Defense Dept...
‘Get a job’: Medicaid work requirements included in Trump’s megabill sparks...
US visa bans on Brazilian judges spark diplomatic rift, cloud economic...
Trump has now been in office for six months, for the...
Slovenia approves law to legalize assisted dying for terminally-ill adults
Heritage Foundation founder Edwin J. Feulner dies at 83
Insider Dealing News
  • Stock
  • Investing
  • Politics
  • World News
  • Editor’s Pick
Politics

CBA stock hits record, tops $200B after ceasefire, but overvaluation risks remain

by June 25, 2025
written by June 25, 2025
Commonwelath bank of australia, CBA stock, CBA share price, Iram-Israek ceasefire

Shares of Commonwealth Bank of Australia (CBA) surged to a record high on Tuesday, buoyed by news of a ceasefire between Iran and Israel announced by US President Donald Trump.

The announcement sparked renewed optimism in financial markets, with investors pivoting toward safer assets like Australian equities.

CBA’s share price rose as much as 2.3% to A$188.55 in early trading, propelling its market capitalization past the $200 billion mark for the first time, according to Bloomberg data.

The rally solidified CBA’s position among the ten largest global lenders, surpassing Royal Bank of Canada’s market value of $179 billion.

“The Australian market tends to be sensitive to geopolitical developments as heavyweight mining stocks are exposed to commodity prices, and the ceasefire announcement has been a catalyst for the strong recovery after a few disappointing sessions,” said Junvum Kim, senior sales trader at Saxo Asia Pacific.

However, despite the geopolitical tensions which have rattled global markets, CBA has continued to attract investors, largely due to Australia’s perceived economic stability and the bank’s dominant role in the domestic financial sector.

What is behind CBA stock’s appeal among investors?

As the largest constituent of Australia’s benchmark index, making up 12%, CBA has become a go-to stock for offshore investors seeking defensive exposure.

“The driving reason for this continued rally is that there are still offshore investors who want exposure to the Australian stock market,” said Tony Sycamore, a market analyst at IG Australia in Sydney in a Bloomberg report.

Investors looking to invest in the relative safety of the nation’s equities are heading toward CBA, he added.

Source: Bloomberg

The bank’s long-term performance backs up investor enthusiasm.

Over the past five years, CBA’s share price has climbed more than 170%.

This is despite its earnings per share growing at a modest 5.4% annually—suggesting that market sentiment has lifted valuations beyond what earnings alone would justify.

Valuation concerns linger despite momentum

However, some analysts remain cautious about the sustainability of CBA’s rally.

Commonwealth Bank is seen as having the least return potential among major global lenders.

It also ranks among the most expensive bank stocks, trading at 30 times forward earnings—double the valuation of JPMorgan Chase & Co., which trades at a multiple of 15.

“Commonwealth’s A$300 billion market capitalization is being driven more by the absence of better investment alternatives than by its intrinsic strengths,” Citi analyst Thomas Strong wrote in a note to clients.

He believes that investors have largely chased earnings momentum, joining a broader trend of rotating into bank stocks from other sectors.

He attributes much of the rally to passive investment flows creating a structural squeeze.

Strong warns that history suggests sector rotations—when investors shift funds between industries—can unfold rapidly, potentially putting pressure on the stock.

Outlook: what should you do with the stock?

According to the Wall Street Journal, 10 of 15 analysts covering the stock recommend selling it, with four underweight on the stock, with an average price target of $117.15, an almost 38% downside.

Macquarie, for instance, is bearish, while Citi and UBS warn of stretched valuations and limited core profit growth.

As conviction builds around alternative investment opportunities, Thomas expects this to serve as the trigger that ends Commonwealth Bank’s stretch of share-price outperformance.

He expects that growing conviction in alternative investment ideas could serve as the trigger for a broader correction in CBA’s stock price.

“Short-term momentum is self-fulfilling. The stock’s rise has attracted algorithmic traders and retail investors chasing returns, creating a feedback loop. As shows, the disconnect between its soaring share price and stagnant earnings is stark,” said AInvest.

“The CBA rally is a short-term liquidity-driven phenomenon, not a reflection of durable value. While the stock may continue to climb in the near term, the risks of a sharp correction are high,” the platform says, urging investors to “avoid chasing” the momentum.

“Even if geopolitical distractions keep investors complacent, the fundamentals and broker warnings suggest a peak is near,” it says.

The platform advises investors to wait for a pullback and look for dips below $150 before considering entry, ideally paired with clearer macro stability or earnings upgrades.

The post CBA stock hits record, tops $200B after ceasefire, but overvaluation risks remain appeared first on Invezz

0 comment
0
FacebookTwitterPinterestEmail

previous post
Asia’s energy security under threat as Middle East tensions drive up LNG prices
next post
Is the Iran-Israel ceasefire real or Trump’s dream? What happened and what’s next

Related Posts

EU Inc: can Europe finally build its own...

July 18, 2025

Donald Trump set to open the US retirement...

July 18, 2025

Saab shares climb over 12% as defense firm...

July 18, 2025

China threatens to block $22.8B port sale without...

July 18, 2025

Israel’s stock market hits record high despite Israel-Hamas...

July 18, 2025

US visa bans on Brazilian judges spark diplomatic...

July 19, 2025

Trump sues Murdoch and News Corp over Wall...

July 18, 2025

Donald Trump demands 15-20% tariffs on EU: report

July 18, 2025

Fed Governor Waller reiterates case for rate cut...

July 18, 2025

Bank of America reveals trades investors can do...

July 18, 2025

EU Inc: can Europe finally build its own...

July 18, 2025

Donald Trump set to open the US retirement...

July 18, 2025

Saab shares climb over 12% as defense firm...

July 18, 2025

China threatens to block $22.8B port sale without...

July 18, 2025

Israel’s stock market hits record high despite Israel-Hamas...

July 18, 2025

US visa bans on Brazilian judges spark diplomatic...

July 19, 2025

Trump sues Murdoch and News Corp over Wall...

July 18, 2025

Donald Trump demands 15-20% tariffs on EU: report

July 18, 2025

Fed Governor Waller reiterates case for rate cut...

July 18, 2025

Bank of America reveals trades investors can do...

July 18, 2025







    Fill Out & Get More Relevant News





    Stay ahead of the market and unlock exclusive trading insights & timely news. We value your privacy - your information is secure, and you can unsubscribe anytime. Gain an edge with hand-picked trading opportunities, stay informed with market-moving updates, and learn from expert tips & strategies.
    • Privacy Policy
    • Terms & Conditions

    Copyright © 2024 InsiderDealingNews.com All Rights Reserved.

    Insider Dealing News
    • Stock
    • Investing
    • Politics
    • World News
    • Editor’s Pick