Australian banks face margin pressure amid low rates: Reporting season roundup

--  |   15/09/2021 Text size  Decrease  Increase   |  
<p><strong>Emma Rapaport: </strong>Hello and welcome to Morningstar. I'm Emma Rapaport. Today joining us is Nathan Zaia. He is our banking analyst here at Morningstar.</p> <p>Nathan, thank you very much for joining us.</p> <p><strong>Nathan Zaia: </strong>Thanks for having me, Emma.</p> <p><strong>Rapaport: </strong>Nathan, you covered both the major banks and the mid-sized banks, and a lot of the financial services sector. But for today, I'd really like to focus on the reporting season for the major banks. So, can you walk us through what you learned during reporting season? And some highlights and lowlights amongst our major financials?</p> <p><strong>Zaia: </strong>Yeah, okay, sure. I think broadly, things are tracking as we're expecting for three of the majors certainly a quarterly update, don't forget, and for CBA their full year result.</p> <p>So, I think if we start with credit growth, it's really had a bit of a shot in the arm from low cash rates and government support packages. But it's hard to imagine that just continues on, especially with the strong house prices that we've had. I think at some point, you're going to see first-time buyers, which have been driving a lot of demand being priced out of the market. So, yeah, I think, what we've seen in the last 12 months or so might have a little bit more to run. But I think credit growth probably slows down to that low-single digit level over the next couple of years.</p> <p>Net interest margins has been a really interesting one. And we've kind of been waiting for the pressure to come through in the results, given how low cash rates are. Ordinarily, you'd see the bank's margins and earnings come under pressure. But, strangely enough, due to COVID, rising customer deposits have made &ndash; the banks didn't have to price as aggressively. And they've had the term funding facility. So, that's really helped. But we are starting to see that pressure come through now. And I think commentary from the banks does support what we've been saying that it's probably going to get worse over the next couple of years. We've got a lot of older loans, which for us &ndash; would made higher margin being repriced onto newer loans. And we've also got a lot of demand for fixed rate, given how low rates are at the moment. So, those things are going to be headwinds for the banks.</p> <p>NIM, we're already seeing it and I think it'll probably get a little bit worse. I don't want to disregard the potential for rising bad debts as we come out of lockdowns and government support, which has come through again, is pulled. But the banks, they've really did take conservative &ndash; or they look very conservative now provisions last year for loan losses. I think that probably is one of the highlights just how strong the banks loan books are, how they are holding up where arrears are very low. The banks is very well-capitalised, very well provisioned. So, they're in a really good position.</p> <p><strong>Rapaport: </strong>Leading into reporting season you predicted some pretty big dividends and payouts amongst our major banks. Did those payouts eventuate? How did they eventuate? And do you expect more to be coming?</p> <p><strong>Zaia: </strong>Yeah, broadly, yes. I think CBA's payout ratio was a little bit lower than what we had. We kind of figured &ndash; when you've got such a large capital buffer, and your earnings are so strong, you're not going to pay out the top end of your payout ratio at that time, then will you ever but that was slightly lower than what we thought but not material.</p> <p>In terms of the buybacks, yeah, that's pretty much what we expected to Commonwealth Bank. The 6 billion off market buyback (indiscernible) the on-market route. We did think the other two would probably do part of their capital management through off market. But yeah, that hasn't eventuated. But yeah, we don't think the banks have done either. We think they're still holding capital well above regulatory requirements. So there probably will be a little bit more over time. I think it's more of a timing thing like we still think Westpac will make an off-market buyback, we forecast 4.5 billion and probably get announcement released the result in early November. The shareholders probably have to wait a little bit longer for that one.</p> <p><strong>Rapaport: </strong>Shareholders love getting dividends and they love buybacks, because that means more cash in their pockets. But from an equity analyst perspective, do you think this was the best use of their capital? Is there a reason that they decided not to invest in their own businesses and pay the money out?</p> <p><strong>Zaia: </strong>Yeah, that's a good question. That's always the decision that each needs to make. But I think if you look at their opportunities to grow their loan books, so if they had business lending or home loans like they're doing as much as they can on that front, and the banks have just gone through a process of divesting everything that's non-core to those banking operations. So, really, they would be looking for opportunities where they can add things that help those businesses, they're all pretty small things. So, it's hard to find a large investment opportunity that would move the needle and actually support where they have their competitive advantage. So, I think that's why the banks are probably turning to returning at least some of this excess capital to shareholders. I think it is the right thing to do.</p> <p><strong>Rapaport: </strong>This story of the banks having a really good half - is that across the entire banking sector? Are the small and medium-sized banks experiencing that same rebound?</p> <p><strong>Zaia: </strong>Yeah, it's really across the whole industry. And for the smaller and mid-sized banks, I think they're actually benefiting a little bit more than the majors. If you think about their funding costs, they don't typically have as much cheaper wholesale funding, they rely more on securitization markets. And at the moment, they're able to get those cheap customer deposits that the majors rely so heavily on at similar sort of prices as well. So, they don't have that disadvantage. And I also think the majors kind of getting bogged down in refinance applications. Whereas if you're a smaller lender with a smaller loan book, it takes more before your loan approval processes blow out and it becomes slower. And we're seeing it in their loan growth like Bendigo grew its loan book or home loan book 15%, and the market grew 5%. So, I know they've really enjoyed this period as well.</p> <p><strong>Rapaport: </strong>So, I want to focus quickly on the CBA result. The only major bank, as you mentioned before, to have a major result, as opposed to just a quarterly update. We saw a 20% increase in profits, what was driving those profit figures for the half?</p> <p><strong>Zaia: </strong>Yeah, for the full year, the big swing factor was last year the bank was raising loan impairment provisions for the losses that were going to come through or they thought might come through. And they're obviously &ndash; not having to do that, but they're also releasing some of those provisions. So, it's really flattering the growth rate that we're seeing in this period.</p> <p>If you look at the result before those loan, impairment expenses, bank profit was up slightly on last year. And I think the second half was up about 1% on the first half. So, it's really like quite anemic growth at the underlying rate. That's CBA delivering strong loan growth. But as we mentioned earlier, some pressure on net interest margins, and the bank is continuing to invest for the future. And I think you don't get that strong loan growth, and make sure that it continues to come in and hold your market leader position without that ongoing investment. So, there is a couple of moving parts, both behind the underlying, but it's really those loan impairment expenses that have driven a large swing.</p> <p><strong>Rapaport: </strong>As you highlighted, CBA, in particular, have seen a real price increase. They've gone from about $57 during the lows of March 2020 to around $108 today &ndash; a really big increase. In your opinion, are shares currently trading under or at an overvalued level?</p> <p><strong>Zaia: </strong>No, we think they are a little bit overvalued at the moment. If you go back to March 2020 everyone was trying to guess what sort of credit stress the banks would see over the next 12, 24 months and they are being priced for, I'd say a pretty dire situation, but then also being priced as if that situation would never end. And then if you look at current levels now and CBA is on a P/E of 19, a dividend yield under 4%. And that yield might sound appealing and I think that's probably what is &ndash; you're seeing a lot of retail holders happy to keep buying CBA. But let's not forget, earnings are vulnerable to economic weakness. And it's, I guess, a little bit surprising that, the reminder that 2020 was has pretty much been being brushed off by the market. So, already we're seeing CBA make highs. So, yeah, I think it is overvalued. The other banks trading around fair value or Westpac slightly below fair value I think they are better options at the moment.</p> <p><strong>Rapaport: </strong>In terms of good ideas in the banking and the financial services sector - you spoke a little bit before about how Westpac is undervalued. But are there any names that you would highlight in your coverage to investors&ndash; even outside of the banks?</p> <p><strong>Zaia: </strong>Yeah, the biggest fair value change we made have been post reporting season. And that was two smaller companies I cover, so that's Steadfast and Austbrokers. They're both narrow moat rated names. And they really didn't missed a beat during COVID. There was very little impact on their businesses in what was a very volatile and uncertain period. And that kind of got us rethinking about the resiliency of these names. So, for those that don't know, they are insurance brokers, and they make a commission based on the insurance premiums that their brokers derive, so they take no underwriting risk, so they're not on the hook for claims at all.</p> <p>So, we concluded that, yes, there would be some impact on premiums if businesses fold in really tough economic periods, but it's probably less severe than the majority of businesses we cover. Insurance is typically one of the last expenses that people trim, the consequences of not having adequate cover can be significant. So, taking the view that earnings risk is below average, because these businesses have quite resilient business models, and because they are growing strongly by reducing our discount rate, our fair values went up by around 30%. So, we see both of those names undervalued at the moment.</p> <p>Just a quick, why do we like these businesses, first of all, we think there is customer switching costs, brokers typically have no incentive to leave their network. And in many cases, the network owns stakes in those brokers anyway. And customers generally don't leave their broker. And we think revenues are prime to continue to grow. We've got insurance premiums rising, they're not making good returns at the moment, they need to keep putting up premiums, brokers are taking more and more share of the market. And businesses and even individuals are finding the benefits of using a broker which has expertise in the space and can shop around across different insurers. It's pretty much like you're going to a mortgage broker. And these are very capital light businesses, they're generating strong free cash flow, and that's supporting both dividends and ongoing growth in their businesses.</p> <p><strong>Rapaport: </strong>Great. Thanks for those ideas. Just to close out, we've been asking all the analysts to spend the month listening through hours and hours of earnings calls and reading through presentations and PDFs and everything that comes with it. If there was anything that they can share with our viewers that they learned during an earnings call, maybe they were listening to a management team that maybe was surprising, or something that you picked up during these sessions that you could share?</p> <p><strong>Zaia: </strong>Yeah, it's probably not that interesting or surprising. But I would say, in general, like the contrast between this year's call and last year is just management did not appear as concerned at all about lockdowns that we're in at the moment. I believe banks were actually releasing reserves and returning capital during these lockdowns. And I think we've seen how effective the vaccine is, how effective government support has been. And while there is still a lot of uncertainty, I think there is a lot more confidence this time around than there was 12 months ago. And I think the one thing that was caught out in a few places was just timing on international borders opening back up, that's one area where there still is a lot of caution.</p>

Video Archive...

Telstra's mobile earnings and margins are up: Reporting season
11/08/2022  Senior equity analyst Brian Han talks about Telstra's highlights this reporting season.
CBA grows loans and deposits: Reporting season
11/08/2022  Equity analyst Nathan Zaia talks through CBA's highlights this reporting season.
Webjet is undervalued: Morningstar
05/08/2022  Morningstar believes travel will be back in 2024.
Why is Zip up 160% this month?
29/07/2022  The latest update management told investors what they wanted to hear—cost cutting, lowering credit risk and a commitment to reduce cash burn.
"Writing on the wall": Big drop at Walmart signals pain to come for JB Hi-Fi, Harvey and Myer
27/07/2022  Momentum for the consumer discretionary sector is going backwards and spells trouble for earnings.
"Suits both sets of investors": Morningstar on the ANZ-Suncorp tie-up
21/07/2022  Suncorp shareholders are selling at a premium while ANZ gets an easy way to scale up home and SME lending.
Expansion fading into rearview mirror: AustralianSuper's Jessica Melville
07/07/2022  Bond exposure growing as the portfolio prepares to get defensive.
5 things to do during a bear market
04/07/2022  Rebalancing, tax-loss selling, and buying on the dip are among the productive moves to consider.
What happened to Australian equity market outperformance?
04/07/2022  Growth jitters and the possiblity of reduced iron ore demand in China have swiped the heavyweight banking and resources sectors.  
Queensland government hikes royalty rates: What does this mean?
01/07/2022  Morningstar equity analyst Jon Mills explains royalty rate hikes and how the changes impact Australian miners.
Three sustainable global equities with Anthony Doyle
29/06/2022  Firetrail's head of investment strategy talks through his global equity picks in the sustainable space. 
"Depends what the separation looks like": Morningstar on Suncorp's demerger plans
28/06/2022  While the benefits of the current model are modest, a demerger won't deliver shareholders an automatic win, says Morningstar equity analyst Nathan Zaia.
Hunker down but the turn isn't far away: Schroders' Simon Doyle
24/06/2022  "I think over the next sort of, three, six, nine months, we're going to see some pretty good opportunities emerge, and I think investors who are well prepared will be able to take advantage of that."
Miners not yet cheap: Morningstar explains the iron ore rout
23/06/2022  Policy will continue to fuel short-term price movements but the long-term fundamentals for Australia's biggest export look shaky.
Anton Tagliaferro on companies to weather the market storm
17/06/2022  The founder of Investors Mutual is cool on Australia's banking giants.
Why are banks selling off as rates rise? Morningstar explains
15/06/2022  Faster interest rate hikes from the Reserve Bank have markets worried about bad debts, says Morningstar banking analyst Nathan Zaia.
"Real chance we've broken the system as it was": Platinum backs regime change
14/06/2022  Highly likely investors are on the cusp of an era of permanently higher rates that should favour "real-world companies", says Andrew Clifford, co-chief investment officer at Platinum Asset Management.
"Get defensive": Warnes on where and when to put cash to work
14/06/2022  Build cash and prepare for opportunistic nibbles at companies such as Aurizon, Wesfarmers and James Hardie, says Morningstar's head of equity research.
"I'm still nervous": Peter Warnes on the outlook for equities
10/06/2022  We haven't seen the bottom of the bear market yet, says Morningstar's head of equity research.
From nosebleed to reason: US tech valuations looking attractive
01/06/2022  Earnings growth remains market leading for wide moat stocks like Alphabet, Meta Platforms and Amazon.
Will the election dampen the Australian resource sector?
30/05/2022  Labor looks set to proceed incrementally and existing producers such as Whitehaven Coal could even benefit should more radical policy be proposed.
'We don't learn': Morningstar sits with King Nudge Richard Thaler
25/05/2022  The Nobel prize winner who cameo'd alongside Selena Gomez in Hollywood hit The Big Short  discusses the latest developments in behavioural economics.
Why are Coles, Woolworths and JB Hi-Fi tanking? Morningstar explains
19/05/2022  Local investors were spooked after US retail giants Target and Walmart plummeted overnight as rising prices hit margins and inventory.
Dan Kemp's best tip for successful long-term investing: Beware market narratives
19/05/2022  On his recent visit to Australia, Morningstar's global chief investment officer Dan Kemp talks investing narratives, confronting the growing list of reasons to be concerned about markets and sustainable investing.
What's driving the latest big drop in US stocks?
19/05/2022  Worries about inflation’s toll on earnings sparks Wednesday’s 4% plunge, but stocks are now far undervalued.
Value strikes back: How to manage style in your portfolio
18/05/2022  One of the big themes of the year has been the value comeback. What is behind this resurgence after a pretty dismal period, and should your portfolio be tilting in its direction?
Is it time to recession-proof your portfolio?
11/05/2022  Here's what investors who are worried about a recession should consider today.
Morningstar Best Ideas List: An undervalued play in telecom
11/05/2022  Morningstar analysts have identified TPG telecom as the most undervalued telecom stocks in the ASX 200 detailing multiple catalysts for earnings recovery and growth.
Bill Browder: A scared Putin will only escalate the conflict
29/04/2022  Exclusive: Hermitage Capital Management CEO Bill Browder talks Putin, Russia, and the next six months for Ukraine
5 risks facing the US market right now
28/04/2022  Inflation, rising interest rates, geopolitical risks, and other things to keep your eye on.
Buffett and Berkshire in 2022
27/04/2022  Morningstar's analyst talks about the Buffett's recent deals, what the stock is worth, and whether Berkshire will pay a dividend any time soon.
Fair value upgrades on the table: Morningstar resources update
31/03/2022  Supply disruptions following Russia's invasion of Ukraine are forcing analysts to consider the possibility elevated prices persist.
Bank outperformance speaks to positive trajectory: Morningstar
30/03/2022  Rising interest rates, strong economic growth and cheaper valuations are driving banking stocks ahead of the broader market.
Stock vs stock: Netflix and Disney
28/03/2022  Where are entertainment and streaming services headed?
Morningstar Best Ideas List: WiseTech looks cheap after tech selloff
24/03/2022  Problems in global supply chains are an opportunity for WiseTech as its logistics company customers move to replace old software.
First fires, then floods: How listed insurers are weathering extreme events
23/03/2022  Markets focused on floods and bushfires are missing how insurers are cutting costs, doing more digitally and are looking down the barrel of a lift in investment income.
Don't get 'whipsawed' by false promises of peace in Europe
17/03/2022  Morningstar Investment Management's global CIO Dan Kemp explains why well-intentioned investors desperate for peace in Europe are making dangerous market calls
Morningstar Best Ideas List: Kogan to hold own in faceoff with Amazon
15/03/2022  Knowledge of the local market, strong branding and a growing subscription service should see the undervalued retailer retain market share in the rapidly growing online sales category, says Roy Van Keulen.
"There's been a big rotation in markets": Value surges as growth stumbles
08/03/2022  Higher inflation, rising interest rates and booming commodity markets are driving a major rotation away from the post-pandemic winners, says Tim Murphy, Morningstar director of manager selection.
Afterpay's rivals set for battle with rates and regulators
03/03/2022  Regulators are likely to be less lenient now the buy-now-pay-later sector is part of the fabric of Australian payments.
Industry champions on the cheap: Emerging markets at the Morningstar Investment Conference
23/02/2022  Strong commodity prices, cheap valuations and a head start on interest rate hikes means emerging markets are set for strength, says Dr. Joseph Lai of Ox Capital.
The Russia crisis is heating up, but you need to stay cool
23/02/2022  A belligerent speech from a president signalled the start of the latest phase of Russian agression last night, causing markets to wobble and investors to wonder.
Peter Warnes on FAANGs, investing in Asia and bond market smoke signals
15/02/2022  In an extended interview, Morningstar's Peter Warnes discusses the bear market in US technology stocks, interest rates and growth and his approach to investing outside the US and Australia.
Weighing up Magellan Financial Group after Douglass surprise exit
13/02/2022  Morningstar equity analyst Shaun Ler explains why he see valuation upside high for MFG even as shares lose steam.
Year of the Tiger: What's next for Chinese stocks
31/01/2022  The Chinese lunar year is almost over, and what a ride it's been. Morningstar speaks to JPMorgan Asset Management strategist Mike Bell about what's ahead. 
What to do (and not do) in a volatile market
23/01/2022  Christine Benz discusses how investors should handle the turmoil, whatever the life stage.
Bare shelves only a short-term hit to Coles and Woolies
18/01/2022  Empty shelves will negatively impact supermarkets in the second half of fiscal 2022 but the impact on long-term earnings is minimal, says Morningstar analyst Johannes Faul. 
Morningstar's outlook for 2022
17/01/2022  Bank earnings, house prices and China risk: Our experts and analysts discuss what they've got their eyes on in 2022.
Morningstar's Year in Review 2021
24/12/2021  Our experts and analysts weigh in on what mattered for investors last year.
"A bump in the road" as Magellan loses major client
21/12/2021  New products, lower fees and a portfolio of undervalued stocks set to help the fund manager right the ship. 
What role should Bitcoin play in your portfolio?
10/12/2021  And how does it match up against gold?
Years of demand remain for Australian coal producers
10/12/2021  Australian miners to be among the last standing as coal use fades.
Year-end portfolio rebalancing: What you need to know
08/12/2021  Rebalancing your portfolio is one of those beneficial habits that’s easy to let slide. But year-end is an ideal time to check how your portfolio is tracking against your target asset allocation. 
3 quality names from Stewart Investors
03/12/2021  The gold-rated fund manager shares three ideas with long-term potential.
Silver linings for investors amid the climate stalemate: COP26 debrief
01/12/2021  Long-term investor sees opportunities where businesses are moving towards a zero-carbon future faster than governments.
6 qualities of great index funds
30/11/2021  To understand your fund, get to know its underlying index.
Lazard's 3 top picks for the energy transition
29/11/2021  These companies are set to profit from the move to clean energy, says Lazard.
An uneven energy transition leaves room for coal and gas: COP26 debrief
24/11/2021  The results of the COP26 climate summit suggest coal demand is likely to persist for longer than expected.
What rising inflation means for Australian investors
17/11/2021  And how investors can protect their portfolios.
6 inflation-tough stocks for global investors
08/11/2021  Morningstar thinks these moaty companies will remain resilient in the face of inflation and ongoing supply chain challenges.
Risk/reward equation still looks good at Westpac
05/11/2021  Morningstar maintains fair value despite a fall in margins and slower progress on cost reductions.
These aren't the Bitcoin ETFs you're looking for
19/10/2021  These new US-listed exchange-traded funds will invest in bitcoin futures, not bitcoin itself.
ESG funds don't underperform - but nor do they outperform
15/10/2021  The ESG outperformance narrative is flawed, new research shows.
Building investment portfolios in a low interest rate environment
06/10/2021  Investors may need to hold more growth assets over the coming years, says Morningstar's Jody Fitzgerald.
Covid impacts still being felt in real estate and tech: Reporting season roundup
01/10/2021  And how G8 Education and Link Administration are positioned for long-term success.
Look to Credit Corp for a leading indicator of economic health: Reporting season roundup
30/09/2021  What Reporting Season August 2021 told investors about the health of the financials sector.
Cause for optimism at a2 Milk and Invocare: Reporting season roundup
28/09/2021  a2 milk is an opportunity to be greedy when others are fearful.
Post-covid normalisation is underway in healthcare: Reporting season roundup
23/09/2021  Covid's winners and losers are returning to their prior trajectories. 
One of the most underappreciated dangers of investing
21/09/2021  Sequence-of-returns risk matters for both retirees and savers. Here's why. 
REITs recover pandemic losses: Reporting season roundup
20/09/2021  Analysts expect the sector to recover to pre-Covid trading levels once borders reopen.
Australian banks face margin pressure amid low rates: Reporting season roundup
15/09/2021  Rising customer deposits and access to cheap funding helped Australia's banks stave off net interest margin pressure, but analysts see warning signs.
Greenwashing explained
14/09/2021  Morningstar's Hortense Bioy on how to spot greenwashing and how to avoid it.
Earnings down as private money circles infrastructure: Reporting season roundup
13/09/2021  Utilities and infrastructure names battle the impact of covid as private equity and pension funds circle. 
Frenzy of mergers in energy: Reporting season roundup
10/09/2021  Hydrocarbons poised for a comeback.
TPG tipped to recover as mobile competition eases: Reporting season roundup
09/09/2021  Providers have lifted prices after years of a debilitating chase for subscribers at all costs , says Morningstar's Brian Han.
Short-sellers bet against ARK Innovation ETF
08/09/2021  What shorting ETFs means for long-term investors.
Surging lumber prices were no match for Brambles: Reporting season roundup
07/09/2021  Morningstar senior analyst Grant Slade says Brambles secular growth trend is intact despite nearterm headwinds. He discusses results from the building and construction materials sector.
Miners soar thanks to iron ore: Reporting season roundup
03/09/2021  Miners bask in the glow of iron ore prices while bargains remain in coal.
BHP-Woodside merger is mutually beneficial
23/08/2021  Post-merger Woodside would be well positioned to deliver on the value we've seen for a long time, say Morningstar analysts.
Investors are getting serious about sustainability
16/08/2021  But the sector lacks uniformity, says Morningstar's Christopher Franz. 
Long term outlook for AGL is positive
11/08/2021  Higher wholesale electricity prices bode well for AGL, according to Morningstar senior equities analyst Adrian Atkins.
How you can hedge your portfolio against inflation
11/08/2021  Morningstar FundInvestor editor Russ Kinnel describes some direct and indirect hedges for inflation protection.
The iron ore party can't last: Morningstar
10/08/2021  Copper and iron ore have benefited materially from China’s stimulus and the developed world recovery. But Morningstar analyst Mat Hodge see these benefit as transitory.
What the Afterpay acquisition means for investors: Morningstar Minute
05/08/2021  We believe the transaction has a high chance of succeeding.
Cannabis' federal legal status is not a total buzzkill
03/08/2021  The industry still has significant growth potential.
Stock of the week: Toyota
03/08/2021  Is one of the biggest sponsors of the Olympics positioned for an all-electric future?
2 listed microcap names to consider
23/07/2021  Morningstar's Lex Hall talks micro-cap stock picks with Carlos Gil, chief investment officer at Microequities Asset Management.
Big returns, big risks: Making money with microcaps
22/07/2021  Mornngstar's Lex Hall catches up with Carlos Gil, chief investment officer at Microequities Asset Management.
3 small-caps with Dawn Kanelleas
21/07/2021  The head of Australian small and mid-cap stocks at First Sentier Investors has her eye on ARB, Breville and IDP Education.
Forecast 2021–2022: A correction could be around the corner
20/07/2021  The strong performances of global stock markets in 2020–21 are unlikely to be repeated in the coming year says Morningstar's Peter Warnes.
'Overvalued' warnings grow as ASX 200 hits new high
12/07/2021  Morningstar equity analysts warn that equities remain overvalued despite Australia's strong economic recovery.
What to know about private equity
08/07/2021  Private equity is an exciting area for investors, with lots of hotly-tipped stocks. But there are risks to be aware of, says Pitchbook analyst Dylan Cox.
Lazard's 3 top picks for the global covid recovery
08/07/2021  Warryn Robertson is looking at French infrastructure, retail pharmacy and tax services.
Aussie banks $34bn surplus points to more shareholder dividends, buybacks
06/07/2021  Australia's largest banks have excess capital because they cut dividends, were more conservative on lending, divested assets and raised equity last year. Morningstar's Nathan Zaia thinks most of it should be returned to shareholders.
Weighing up the PEXA IPO
02/07/2021  PEXA burst onto the ASX this week in the biggest float since 2019. Morningstar's Gareth James gives his take on the company's future growth prospects.
Can the iron ore price keep rising?
30/06/2021  Iron ore prices have  been on a tear, boosting the profits of Australia's top miners.  How did we get here and is the only way up? Lex Hall sits down with Morningstar's Mat Hodge.
2 new stocks to watch
28/06/2021  Morningstar has recently initiated coverage of a food delivery app and a consumer finance product. 
'Strongest earnings season I've ever seen'
24/06/2021  Meeting the deluge of demand is the biggest task for US companies, says Bell Asset Management's Ned Bell.
Biotech beyond covid
22/06/2021  Are there still opportunities in the biotech sector now the covid-19 vaccine roll out is underway? We ask International Biotechnology Trust manager Ailsa Craig
Alibaba is still deeply undervalued
21/06/2021  Morningstar's director of Asia equity research is confident the e-commerce giant will bounce back.