Banks enter bubble zone: analysts

AgH20 · May 2, 2013

http://www.afr.com/p/business/companies/banks_enter_bubble_zone_analysts_xIJkT8jPUtbZKVDEkoZlfJ

John Kehoe and Bianca Hartge-Hazelman
Australian bank shares have entered a risky great bubble territory similar to the peak of the internet stock boom that ended in a crash last decade, leading fund managers and the country's top-rated bank analyst have warned.

As share prices of the big banks surge to record highs, Emilio Gonzalez, chief executive of BT Investment Management, majority owned by Westpac Banking Corp, said his 25 years' experience in markets suggested soaring asset prices generally led to a correction.

"That happened in 1999-2000 with the internet boom and I'm seeing similar symptoms [among banks] which throws up a few red flags," he said. "Banks are a leveraged play on the economy and that shouldn't be forgotten, so hopefully as people chase those yields they have a diversified portfolio."
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