KEY POINTS:
CBA
Commonwealth Bank shares have started to recover from a steep slide that started with the US debt crisis, but accelerated when investors perceived the bank to be more vulnerable than some of its peers. However, the banking sector as a whole started picking up after US investment bank JPMorgan Chase agreed to raise its offer for troubled Bear Stearns from the original US$2 a share to US$10 a share.
Another positive factor was the tentative signs of a pickup in the US housing market.
Commonwealth Bank has also reported a windfall, amounting to gains of about A$355 million, from the sale of just over half its shares in the recently floated Visa.
The banking sector in Australia has been extremely volatile as the market tries to read the impact of the unfolding debt crisis.
This is ironic for an investment sector that is thought to be defensive and boring.
HLG
Hallenstein Glasson has reported a slightly lower first-half net profit of $9.2 million, down 6.6 per cent on the same period a year ago. The result was consistent with the January market update which predicted a profit figure of around $9 million.
The company warned that retail conditions will continue to be challenging for the immediate future as high interest rates, increased fuel costs and cost of living increases restrict consumer spending.
Hallenstein operates in a retail market that is out of favour with investors, who expect falling consumer confidence to hit the sector later in the year.
However, Hallenstein is much respected for its conservative but innovative management, a strong balance sheet with no debt, and reporting standards that seldom deliver very bad surprises.
It is certainly vulnerable to the retail downturn but the share is priced on a very low p:e ratio to account for that risk.
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