Tuesday, September 6, 2011

Screenshot of Westpac's market cap > BAC's market cap

Last week, my friend just got back from Melbourne. We met up in Taipei to catch up. Then he said something absolutely crazy. His cousin had just purchased a $750,000 AUD home. He has three children and his wife is a homemaker. His salary is $60,000 AUD.  That's right, his cousin's house is 12.5X times there pre-tax income.  That's absolutely ridiculous. This is all anecdotal, so maybe they are just outliers of the average Australian new home-buyer.  I hope they are, and I hope my anxiety isn't warranted.

Bronte Capital has a great post with some Australian bubble pictures, it's pretty jaw dropping.  The Inoculated Investor had written up an analysis of the Australian banks in 2009. It's a bit dated now, but worth the read.

I've had a negative point of view on Australia and Australian banks for quite a while (for fun I think about Australia...I need a real hobby).  On August 23rd something pretty memorable happened. The equity market cap for Westpac was actually larger than the equity market cap for Bank of America. I thought this was so strange I took a screenshot of it.

Bank of America's August 23, 2011 (equity) Market Cap of 63.54B

Westpac's August 23, 2011 (equity) Market Cap of 63.58B

In five years from now we will see how different the delta is.


  1. Huh... How interesting.

    Just look at the book values and various ratios. Westpac has a fraction of the deposits.

    I think that this really says something about the outlook that people have towards property in both the US and Australia.

  2. Sad to say, that's pretty normal for a lot of the house owners here it seems... :(