Questions of the Week – is Challenger cheap?

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Question: Challenger (CGF) has fallen from $14 to under $ 11. Would it be good buying at this price? 

Answer (By Paul Rickard): I am a bit of a loss to understand why Challenger (CGF) has fallen so hard.

The market has become a little concerned about margin pressure, and sale of new annuities. The latter reflects a decline in business originating in Japan (where Challenger sells Australian dollar denominated 20-year fixed rate annuities), due in part to US bond yields now being higher than Australian bond yields. This all said, Challenger has re-affirmed guidance.

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