If I don’t want any more Aussie banks, can I get an ETF that gives me access to US and European banks? How does TPG’s capital return of $3bn work? What do the major brokers think of Wisetech? Is AMP paying a dividend and is it franked or unfranked?
Question 1: If I don’t want to buy Australian banks (or run down my holdings), is there an ETF that gives me easy access to global banks?
Answer: Yes, Betashares has Global Banks Currency Hedged ETF that trades under the ticker BNKS. It tracks a NASDAQ index of large banks from the developed world, ex Australia. The index comprises about 60 banks, with a geographic domicile weighting of about 33% in the USA, 14% in Canada, 10% in the UK, 8% in Japan etc. The biggest banks represented are JP Morgan, Bank of America, Wells Fargo, Royal Bank of Canda and HSBC.
Interestingly, the forward PE (price earnings) of the banks in the index is around 10x (CBA is about 27 times, the other majors 12 to 18 times), and a price/book ratio of 1.32 (CBA is around 3.0 times). This just re-inforces how expensive Australian banks are.
Recent performance has been pretty strong. 9.7% over the last 3 months to end June, 33.7% over the last 12 months and 22.2% pa over the last 3 years
BNKS has a management fee of 0.47% pa and expenses of 0.10% pa.
Question 2: TPG Telecom has announced a capital return of about $3bn. How will this work exactly?
Answer: If shareholders approve, approximately $3bn will be returned via a capital reduction. Shareholders will receive $1.61 per share in late October.
The $3bn arises from the sale of TPG’s fibre network infrastructure assets and wholesale fixed business to Vocus Group for about $4.7bn. The remainder of the proceeds will be used to pay down debt.
Minority shareholders in TPG (that is everyone bar Vodafone, CK Hutchinson, David Teoh and Washington Soul Pattinson) will be given the opportunity to re-invest their capital reduction proceeds of $1.61 per share into new TPG shares (price to be advised). If all minority shareholders take up the offer, approximately $688m will be raised. The proportion of shares of TPG owned by the minority shareholders will increase from 23% to 30%.
Question 3: Wisetech is in the news again, for the wrong reason. What do the major brokers think?
Answer: The major brokers continue to support WiseTech (WTC) on valuation grounds. They also note that the integration of e2open has been completed ahead of schedule. All brokers currently have a “buy” rating.
According to FN Arena, The consensus target price is $133.97, about 15.9% higher than the last ASX price of $115.62. the range of target prices is a low of $124.00 from Ord Minnett through to a high of $145.00 from UBS.
Question 4: Is AMP paying a dividend? What is the franking percentage?
Answer: Yes, AMP is paying an interim dividend of 2c per share on 26 September, the same as last year. The franking percentage is 20% (i.e. 80% unfranked). AMP shares will trade ‘ex-dividend’ on 21 August.
