Why Macquarie Shares Have Spiked Since Last Week

Shares for Macquarie Group Ltd [ASX:MQG] are slightly down today after spiking over 3% since last week. At time of writing, Macquarie is trading at $138.39, higher than Thursday last week when they were trading at $134.12.

Macquarie is a diversified financial group operating in 27 countries. They provide services in banking, asset management and finance, advisory, investment and funds management services.

With a market cap of $49.13 billion, the company’s shares are up over 22% this year.

What happened?

On 11 December, S&P Global Ratings agency upgraded Macquarie’s Bank Limited long-term credit rating to an A+, previously an A. The rating hadn’t changed in the last 28 years.

They also upgraded Macquarie’s Group Limited long-term credit rating to a BBB+ from a BBB.

In the view of the ratings agency, ‘the group and bank’s risk management capabilities have strengthened over time’.

As they mentioned in the release:

The Macquarie group and MBL’s performance and risk management outcomes pre and post the global financial crisis. Compared with a peer group of international banks, the volatility of the Macquarie group’s earnings has been lower for a sustained period and the group was able to deal with global credit headwinds.

In November this year, Macquarie released its 2020 half-year report ending 30 September 2019. The company saw a net profit after tax of AU$1,457 million, up 11% from the same period last year (1H19). Yet this is down 13% from the half-year ended in 31 March 2019 (2H19).

Macquarie also announced an interim ordinary dividend of $2.50 per share (40% franked), an increase of over 16% since the same period last year. Yet again, this is almost 31% down from the 2H19 final dividend of $3.60 a share.

What could happen next?

Macquarie still expects the full-year results this year to be down compared to FY19. This is mainly due to market conditions, the impact of foreign exchange rate and regulatory uncertainties among other factors.

If you are looking for better dividend plays you can check out our ‘Top Five Dividend Stocks for 2020’ report. You can get it free here.


Selva Freigedo, 

Editor, The Rum Rebellion

Selva Freigedo is a research analyst for The Rum Rebellion.

Born in Argentina, her passion for economic analysis started at a young age. Her father was an economist for the Argentinean governments and the family used to discuss politics and economics at the dinner table.

Argentina is a country with an unusual economic history. Growing up there gave Selva first-hand experience on different economic phenomena such as hyperinflation, devaluation and debt default.

Selva has also lived in Brazil, Spain and the USA.

Back in 2000 she was living in the US as the dot com bubble popped…
And in 2008 she was in Spain as the property market exploded and then collapsed…

She has seen first-hand what happens when bubbles burst.

Selva joined Fat Tail Investment Research’s team in 2016, as an analyst. She now writes from her vantage point in Australia, where she settled in 2015.

The Rum Rebellion