Regal Partners says it expects Commonwealth Bank stocks to slump over the next five years and BHP’s to surge, with the ASX’s largest companies both trading at about $100 a share in a major shift for the index.
BHP shares have already rallied more than 30 per cent this year and hit a record $68.77 in August as a surge in copper prices cemented its title as the ASX’s most valuable company with a market capitalisation of $308 billion.
That coincided with a 6 per cent decline in CBA to $152 this year as concerns about slowing credit demand, falling property prices and more competition dragged the lender’s market capitalisation to $253 billion.
Regal, which has been hugely bullish on copper and is still shorting CBA, believes this rotation is just the start of a years-long trade.
“Phil King and I have often discussed the scenario over the next five years where CBA and BHP are both trading at $100,” Regal investment director Charlie Aitken wrote in a note to clients on Monday.
“We’ve generally kept that view to ourselves because it once sounded so outrageous. Today, it doesn’t sound so far-fetched.”
Regal said Australian banks were not immune to the stresses in the private credit sector after the high-profile collapse of property developer Bathla, despite no direct exposure to the failed real estate giant. That’s because the lenders had significant exposure to the building and construction sectors, as well as workers in the industry left out of pocket if a developer collapsed.
“I would be astonished if arrears, bad and doubtful debts and credit card delinquencies aren’t all increasing sharply for … banks,” Aitken said.
Source: https://www.afr.com/markets/equity-markets/regal-sees-a-world-where-bhp-and-cba-both-trade-at-100-20260921-p60z1j