|Data for week commencing 18 November 2019|
It’s been a week of disappointment for those of us long banks and long Donald Trump and his trade deal. The Westpac/AUSTRAC embarrassment and poor performance not only brought down the bank’s share price nearly 7% over the week, it led Goldman Sachs to drag its target price for the bank down by 10%. “In all cases, banks underperform peers in the 12 months after the incident by an average of 18 per cent,” the U.S. investment bank said in its report about Westpac.
The Westpac blow up is not only terrible for the bank’s brand and reputation, it hurts bank share prices and takes the stock market down, also not helping confidence that our struggling economy really needs right now. The strength and the reputation of our banks were important in helping our economy resist the negative winds of the GFC and in part helped explain why we didn’t end up in recession, which in turn was responsible for why our jobless rate didn’t top 6% over that time.