Macquarie uncertain of outlook
Macquarie Group's share price dropped almost five per cent yesterday after the investment bank's chief financial officer, Greg Ward, told an analysts' conference that market conditions were increasingly uncertain, making short-term forecasting difficult.
Ward said "some business activity levels" were being "adversely" impacted by market conditions.
While he went on to say that it was too early to evaluate the implication for the 2010/11 results (Macquarie has a March 31 financial year end), investors took his comments to be an earnings downgrade and sold the stock.
Macquarie closed yesterday at $40.65, down $2.02 on the day.
Macquarie has a diversified global business and is sensitive to problems in Europe and North America. Last financial year it earned 48 per cent of revenue in Australia, 18 per cent in Asia, 21 per cent in the Americas and 13 per cent in Europe and the Middle East.
Support for Macquarie was further eroded by reports that the chief operating officer of Macquarie Capital, Andrew Low, would leave the group to set up his own business.
The departure follows those of some other high profile executives in recent times: the head of US equity capital markets, Jim Rossman; and the head of US financial sponsors coverage, David Baron.
Ward said the group was "well placed" for the medium term, with global reach and depth, good diversification in the business mix, a strong balance sheet and continued expansion of the global business.