International investors are bailing out of Australia's banks as the United States prepares to wind back its economic stimulus programmes and the Australian dollar tumbles.
Shares in the big four banks were sold off this month after US Federal Reserve chairman Ben Bernanke said the central bank would begin slowing the pace of its quantitative easing stimulus later this year.
Among Australia's big four banks, only shares in Westpac and ANZ are traded on the NZX. Westpac shares fell from a high of $41 in May to a low of $32.70 on June 21, a decline of more than 20 per cent. ANZ shares dropped from $38.30 on May 1 to $32.60 on June 21.
In contrast, shares in the only other NZX-traded bank, locally owned Heartland Bank, have risen steadily from 69 cents on December 17, 2012, when it was granted a banking licence by the Reserve Bank, to a high of 84 cents on June 5.
Global investors have piled into Australian bank stocks over the past year to take advantage of their high dividend payments at a time when returns from bonds have fallen as a result of quantitative easing by the world's central banks.
But analysts said they were now heading for the exits as the tapering off of stimulus measures in the US drove up global bond yields and pushed down the Australian dollar.
"You have got these international investors that potentially have large profits from buying the Australian banks over the past 12 months or so," Morningstar analyst David Ellis said.
"I think increasing numbers of them have sold their bank share to get as high an exchange rate as possible. The risk of not selling with the exchange rate falling against the US dollar is that those unrealised gains were reducing.
"Both bank share prices and the Australian dollar were falling. That has accelerated in the past week or so."
In a positive sign for the US, Bernanke said last week that moderate economic growth was leading to an improvement in the country's job market, which would allow the Fed to pare back its US$85 billion (NZ$108b) a month bond-buying stimulus programme later this year and end it in mid-2014.
The news triggered a sharp decline in the Australian dollar to around US92 cents - the lowest level in almost two years - as the US currency rallied.
Shares in ANZ Banking Group, Commonwealth Bank of Australia, National Australia Bank and Westpac Banking Corp finished down for the week.
International investors had steadily built up their stakes in Australia's banks over the past year to the point where they owned 28 per cent of ANZ in March, 23 per cent of Westpac, 22 per cent of NAB and 20 per cent of CBA. But analysts say this has been in decline since May, when the Australian dollar began to fall back, and the selling accelerated last week.
CIMB analyst John Buonaccorsi estimated that ANZ could get a A$350 million (NZ$416m) boost in revenue from its Asian businesses by 2015 as the change in US policy increases global bond yields and weighs on the Australian dollar.
"We think there are some obvious earnings upside for ANZ, mainly from the Asian business," he said. "Effectively, their progress with the Asian expansion has been dragged back a bit because of the zero interest rate policy, QE and so on."
Buonaccorsi said ANZ would benefit because a lower Australian dollar increased the value of its offshore earnings when they were translated back into local currency terms.
AFR, additional reporting Sunday Star-Times
- Sunday Star Times