Expanding into Asia

Published in the Money Magazine, April 2010

by Dale Gillham

Often exposure to the banking sector is a wise choice for any portfolio, but if you held banks over the past 13 years to December 31, 2009, your returns would vary dramatically. Macquarie performed best, with an average annual capital gain of 38.16%pa, down to NAB at just 6.55%pa. All suffered only three down years except NAB which had six.

Although Macquarie easily outperformed the Big Four, during the financial crisis it fell by around 85% from its high in May 2007. Such volatility can be unnerving.

ANZ's price fell away following a high in October'09. Renewed interest comes as no surprise given ANZ is pursuing a path of growth into the Asian region.

I would expect the upside potential for ANZ's share price to be between $27 and $28 into mid-2010, after which it may be prudent to take profits to minimise your downside risk.

I expect the second half of the year to be more volatile, with possible downward pressure on the banking sector.