CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
US English

Macquarie stock forecast: MQG shares under pressure amid recession fears

By Manaswita Ghosh Dutta

Edited by Jekaterina Drozdovica

14:44, 11 October 2022

Plaque with the Macquarie Bank Limited logo on it.
MQG shares under pressure amid recession fears Photo: Rose Makin / Shutterstock

Australian financial services provider Macquarie Group (MQG) has incurred steep losses so far in 2022, despite strong financials. The stock has been a victim of global turmoil amid the ongoing Russia-Ukraine war, high inflation, a failed takeover bid, and global central banks’ attempts to rein in the high consumer prices through tighter monetary policies.

Here we take a look at the firm’s latest performance and other news that are shaping the  Macquarie stock forecast in 2022 and beyond.

What is Macquarie?

The Macquarie Group is an Australia-based global investment bank, financial and advisory services provider and fund management services. It is one of the world’s largest asset managers and mergers and acquisitions (M&A) advisors. 

The firm was established in December 1969 after its predecessor, Hill Samuel Australia, decided to provide advisory and investment banking services of a global standard to the Australian market.

Shares of the Macquarie Group trade on the Australian Securities Exchange (ASX) under the ticker MQG. They were listed first on the ASX on 29 July 1996. 

What is your sentiment on AU200?

7958.3
Bullish
or
Bearish
Vote to see Traders sentiment!

Macquarie stock analysis

The MQG stock price pleased investors with hefty gains in the last decade, growing over 550% since January 2012, with 10-year annualised trailing returns of 20.89%, according to Morningstar

It was a volatile ride. After achieving the record high of AUD$215 in January 2022, the share price plunged over 26% year-to-date as of 11 October. The loss, however,  was in line with the broader market and the Australian benchmark index S&P/ASX 200 (AU200), where the stock is listed.

Macquarie stock price, 2007-2022

Macquarie's financials: Q1 and full-year

According to the first-quarter trading update released in September, the company’s financials continued to be in good health. The asset manager’s assets under management (AUM) remained at AUD773.9bn, broadly in line with full-year earnings released in March.

The banking and financial services sector saw 8% and 9% growth in home loans and total deposits respectively amid higher interest rate environment, which was partially offset by 10% loss in car loans.

The firm reported strong results across the commodities platforms driven by volatility, trading and client hedging opportunities. Strong client activity was also registered in foreign exchange, fixed income and credit products.

A research company CreditSights noted that “Macquarie has a good mix of businesses that are both profitable and oriented towards seizing low valuation/high volatility opportunities”.

In a note released on 15 August, the firm said that the group’s first-quarter trading statement indicated that business contributions were “either up or significantly up” from a year earlier.

“It has a significant resources and commodities-related business, but it has managed risks and returns effectively, and in FY22 and so far into FY23 has been a significant beneficiary of gas, power and resources volatility. 

“The performance of FY22 won’t be repeated in FY23 since disposals are likely to be much lower. Capital is adequate and it holds a significant book of equity investments, but ALM is conservative. Its spreads offer value for its credit quality and so we have an Outperform recommendation on Macquarie Bank (MBL) and group bonds.”

Earlier in March Macquire posted a strong full-year earnings report, with profit after tax rising to AU$4.95bn, from AU$3bn a year earlier. The firm’s net operating income jumped to AU$17.32bn, from AU$12.77bn. 

According to Macquarie, the higher income was a result of its “continued emphasis on areas underpinning long-term global economic growth”, the group’s adaptability in uncertain times, and its continuing commitment toward sensible risk management. 

The company did not provide the overall guidance for the 2023 financial year, but noted that it will “maintain a cautious stance, with a conservative approach to capital, funding and liquidity that positions us well to respond to the current environment.”

AMD

151.35 Price
-3.270% 1D Chg, %
Long position overnight fee -0.0263%
Short position overnight fee 0.0041%
Overnight fee time 21:00 (UTC)
Spread 0.11

COIN

256.98 Price
+8.980% 1D Chg, %
Long position overnight fee -0.0263%
Short position overnight fee 0.0041%
Overnight fee time 21:00 (UTC)
Spread 0.51

NVDA

118.03 Price
-3.230% 1D Chg, %
Long position overnight fee -0.0263%
Short position overnight fee 0.0041%
Overnight fee time 21:00 (UTC)
Spread 0.11

GME

25.06 Price
-4.370% 1D Chg, %
Long position overnight fee -0.0263%
Short position overnight fee 0.0041%
Overnight fee time 21:00 (UTC)
Spread 0.14

High interest rates and inflation hurt MQG stock

Concerns of an impending recession have taken a toll on the broader market, including MQG stock. The inevitable monetary policy tightening, coupled with the high inflation globally, have led stock markets to heavily incur losses since the beginning of 2022. 

The three major market indices in the US – the S&P 500 (US500), the Dow Jones Industrial Average (US30), the Nasdaq Composite (US100) – along with S&P/ASX 200 (AU200) in Australia, declined more than 9% on a year-to-date basis, as of 11 October. Violeta Todorova, senior research analyst at Leverage Shares, told Capital.com:

"The S&P/ASX 200 index has been trading in a down trend since January 2022 declining from a peak of 7,620 to a low of 6,410 last week. The Australian share market has been trading lower in tandem with global peers, driven by sky-rocketing inflation, geo-political issues and a global monetary tightening campaign.
"Recently the Australian Treasurer Jim Chalmers said that the economy will likely avoid a recession despite the world economy being in a dangerous place. 2Q22 GDP growth in Australia was 0.9% quarter-on-quarter, and the year-on-year rate came in at 3.6%. Although the country might manage to avoid a technical recession, given two of its biggest trading partners – China and the US are suffering strong economic headwinds, equity markets are likely to remain under selling pressure in the coming months."

S&P/ASX 200 Index price 

The Reserve Bank of Australia (RBA) decided to raise its cash rate target by 25 basis points (bp) to 2.60% at its October meeting to bring down soaring inflation. Although it was the sixth rate hike in 2022, it came lower than anticipated, according to Capital Economics’ group chief economist Neil Shearing: 

“A smaller-than-expected increase in Australian interest rates was enough to raise hopes that global central banks en masse may be poised to pivot to a gentler pace of tightening. But Australia isn’t the US or the euro-zone and the RBA isn’t the Fed or the ECB: policymakers in Sydney have particular cause to let up now – including proximity to a flagging Chinese economy.

“With inflation still running hot in most other advanced economies, the immediate focus will be on continuing to deliver jumbo rate hikes in the months ahead. The pivot will come, but it won’t be until 2023”

The RBA was not the only major central bank to post back-to-back interest rate hikes this year. The US Federal Reserve (Fed) implemented four interest rate hikes in 2022, bringing the federal funds rate to the 2.25% to 2.50% range.

As a bank stock, Macquarie could benefit in an environment of higher interest rates, boosting the firm’s profits from lending margins. 

But, this could be offset by the increasing risk of recession and weaker demand, according to Laith Khalaf, head of investment analysis at AJ Bell, as bank stocks are plugged into the overall economic cycle. He told Capital.com: 

“You would have a lot of worries about the businesses and consumers not being able to pay back their debt in a rising interest rate environment. Some analysts may argue the number of debt defaults is going to rise.”

Failed takeover bid for Suez Recycling and Recovery UK

Another factor behind the MQG stock slump was losing a takeover bid for British waste management business Suez Recycling and Recovery UK in September. The group had sought to acquire the firm from French waste giant Veolia Environnement for AU$3.7bn.

However, a consortium of companies – Meridiam, Global Infrastructure Partners, Caisse des Depots Group, and CNP Assurances – exercised its right of first refusal, pushing Macquarie Group off the agreed acquisition deal, as reported by the Australian Financial Review on 23 September. The same group of firms in the consortium own Suez’s operations in France.

The MQG stock price fell over 9% in the four days following the announcement of the failed takeover bid. 

Macquarie stock forecast for 2022 and beyond

Analyst ratings compiled by TipRanks shared a wide range MQG stock forecasts. The consensus rating was a ‘moderate buy’, based on six analyst views, as of 10 October. The 12-month target for the Macquire stock forecast was AU$196.81, ranging from AU$172 to AU$218.

Fitch Ratings upgraded its long-term issuer default ratings (IDR) of Macquarie Group and subsidiary Macquarie Financial Holdings. 

The New York-based credit rating agency upgraded its IDR for Macquarie Group to A from A-, while also raising its IDR for Macquarie Financial Holdings to A from A-.

According to the algorithm-based Macquarie share price forecast from AI Pickup, as of 10 October, the Macquarie stock forecast 2022 could hit a high of AU$213.56, rising to AU$224.43 in 2023 and AU$232.22 in 2024. The site’s Macquarie stock forecast 2025 suggested that the stock could reach AU$237.94 in 2025 and AU$240.86 in 2028.

When looking for Macquarie stock predictions, it’s important to bear in mind that analysts and algorithm-based MQG stock forecasts can be wrong and shouldn’t be used as a substitute for your own research. 

Always conduct your own due diligence on the stock before trading, looking at the latest news, a wide range of analyst commentary, technical and fundamental analysis. Note that past performance does not guarantee future returns. And never trade money you cannot afford to lose. 

FAQs

Is Macquarie a good stock to buy?

Whether Macquarie is a good stock to buy would depend on your risk tolerance, portfolio composition, investing or trading goals and overall strategy. You should always conduct your own due diligence before buying a stock. 

Note that past performance does not guarantee future returns. And never trade money you cannot afford to lose.

Will the Macquarie stock go beyond its all-time high of AU$215.73?

Analyst ratings compiled by TipRanks as of 11 October suggested a 12-month target for the MQG stock price of AU$196.81, ranging from AU$172 to AU$218. Note that their predictions can be wrong.

Should I invest in Macquarie stock?

Whether you should invest in Macquarie stock should depend on your personal circumstances such as risk tolerance, portfolio composition, investing goals and strategy. Always conduct your own due diligence on the stock before investing, looking at the latest news, a wide range of analyst commentary, technical and fundamental analysis. Note that past performance does not guarantee future returns. And never trade money you cannot afford to lose.

Markets in this article

AU200
Australia 200
7958.3 USD
9.8 +0.120%
US500
US 500
5507.2 USD
-45.3 -0.820%
US100
US Tech 100
19526.6 USD
-224.4 -1.140%
US30
US Wall Street 30
40289.6 USD
-388 -0.950%

Related topics

Rate this article

Related reading

The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided in this article is for information purposes only and should not be understood as investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents and has not been prepared in accordance with the legal requirements designed to promote investment research independence. While the information in this communication, or on which this communication is based, has been obtained from sources that Capital.com believes to be reliable and accurate, it has not undergone independent verification. No representation or warranty, whether expressed or implied, is made as to the accuracy or completeness of any information obtained from third parties. If you rely on the information on this page, then you do so entirely at your own risk.

Still looking for a broker you can trust?

Join the 630,000+ traders worldwide that chose to trade with Capital.com

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading