Macquarie Group is a juggernaut in the Australian financial sector. MQG operates Asset Management, Banking & Financial Services, Commodities & Global Markets, and Macquarie Capital segments predominantly in Australia & New Zealand, USA, and EMEA regions. The Sydney based giant is in the top 10 Australian companies’ group, boasts of a diversified business that is exposed to 31 markets globally, and to has been profitable for the last 51 years.
Why is Macquarie Share up on the ASX today?
The Macquarie Group (ASX: MQG) share price has stepped into the green, early in the session on Wednesday. The financial giant shares are on the move. Hence, the company provided an update on its near-term outlook at the Jeffries Asia Forum. Let’s dive into it further to see why the shares jumped by 4.6% overnight to $179.13 per share.
Macquarie stock is on track to post another record profit after it revealed its interim earnings were likely to almost double. Thus, that is just about $2 billion booked in the six months prior, sending its share price to a new high. Consequently, the stock is up almost 20% from the previous high reached before the COVID-19 market slump.
Macquarie stock revealed a stronger-than-expected result in its commodities and global markets business this year. Furthermore, the sale of a smart meter portfolio business in the UK contributed to the healthy result. Adding to that, the financial juggernaut is also enjoying a strong flow of big transactions and market activity.
The commodities and global markets division continued to perform well. The performance was particularly solid in North America. Earnings were driven by trading and hedging, even though MQG’s capital markets business is not enjoying the same COVID-19 raisings opportunity as seen last year.
More importantly, the event that pushed MQG share higher was the company’s update of its short-term outlook. Macquarie said it expected higher transaction activity in its Capital arm to continue onwards. Besides, the division also planned to sell more of its investments. MQG expects to deploy some of the $30 billion war chest built up during the COVID-19 crisis for acquisitions.
On the flip side, Macquarie expects to see 1H22 results to be slightly down on 2H21. The company is anticipating volatile market conditions induced by geopolitical events and COVID-19 as the main catalyst. Nonetheless, MQG has reported a solid 7% growth in its earnings per share on PCP. This was contributed by 4% increases in the group’s operating income to $12.77 billion. Macquarie is a rock-solid institution, with 50 years of consecutive profits, offering a 5-year CAGR of 3% dividend per share. It is also ASX’s fifth bank with a market cap above $62.8 billion.
Overall, we believe Macquarie to continue to deliver superior performance. This is supported by the company’s cautious stance, a conservative approach to capital, funding and liquidity to respond to the current economic environment.