Morgan Stanley: Sell Australian banks

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From Morgan Stanley analysts Richard Wiles and Andrei Stadnik:

We have a negative stance on the major banks as they have come to the end of a super cycle and now face a difficult transition, which features a combination of both operating headwinds and regulatory risks.

We see fundamental change in the mortgage market, modest growth prospects, downward pressure on returns, weaker capital generation, elevated payout ratios and increased political and regulatory scrutiny.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.