ASX Marches Toward 10000? Is CBA Overvalued?
The Australian stock market has continued its strong upward momentum, once again setting a new historical record. Last Thursday, $S&P/ASX 200(XJO.AU)$ broke through the 9,000-point mark, reaching an all-time high.
Several sectors posted sharp gains, with many companies delivering earnings that exceeded market expectations. The Big Four banks all closed higher, while consumer stocks performed strongly: Super Retail Group surged 12.34%, and Bramble hit a record high.
On August 12, the Reserve Bank of Australia cut interest rates for the third time this year, lowering the benchmark rate to 3.6%—its lowest level since April 2023—and hinted at the possibility of another 80 basis points of cuts over the coming year. All 11 market sectors rose, led by industrials, consumer, and financials.
How should valuations be viewed after this surge in Australian equities? Is CBA still the best choice?
Taking CBA as an example:
Current share price: AUD 169
FY24 EPS: AUD 5.63
PE: 30x (above the banking sector average of 20x)
Using the Dividend Discount Model (DDM):
Based on last year’s dividend of AUD 4.65, valuation is around AUD 98–101
If considering gross dividend of AUD 6.80, valuation could reach AUD 143.8
📢 Discussion
Do you think the ASX, boosted by rate cuts and abundant liquidity, can reach 10,000 points this year?
With CBA’s high valuation but stable dividends, would you continue to hold or take profits at higher levels?
In the context of consumption recovery, do you prefer bank stocks or consumer stocks?
If you could only choose one, would it be traditional bank stocks or mining stocks? Which ASX companies stood out this reporting season?
👉 Share your thoughts in the comments to win tiger coins, for example:
I believe the ASX will definitely hit 10,000 points this year!
CBA is too expensive; I prefer consumer stocks to catch up.
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When it comes to CBA, it is true that the valuation is already on the high side, but the Dividend is stable and the profitability is stable, which still has long-term attraction. However, at the current high level, I prefer to take profits in batches when the price continues to rise to the expected range, and allocate funds to more growth sectors. In contrast, consumer stocks are more resilient in the context of recovery, especially retail, tourism and catering companies. Benefiting from the recovery of domestic demand and improved consumer confidence, the gains may be more impressive than traditional banking stocks.
If I could only choose one, I would personally prefer consumer stocks over traditional banking stocks. Although mining stocks are supported by resource prices, they are highly volatile and highly dependent on commodity prices, which is not as predictable as the growth of consumer stocks driven by economic recovery. During the earnings season, some consumer companies performed well. For example, the profit growth rate delivered by retail and consumer goods companies exceeded expectations, showing the resilience of the sector and market enthusiasm.
To sum up, I believe that the ASX has the opportunity to hit 10,000 points this year, but we need to pay attention to the risk of short-term correction at high levels. The CBA Dividend is stable, but the high valuation makes me more inclined to partially take profits and turn to consumer stocks to deploy more growth sectors. If I could only choose one, I would choose consumer stocks, especially those companies that have benefited from the recovery of consumption and reported impressive earnings results, rather than traditional banks or mining stocks. In this way, we can not only participate in the market rise, but also take into account stability and growth.
8月12日，澳大利亞央行今年第三次降息，將基準利率降至3.6%——2023年4月以來的最低水平——並暗示未來一年可能再降息80個基點。11個市場板塊全部上漲，工業、消費和金融領漲。