Regal Partners is an Australian investment firm. It manages various funds focused on alternative assets. The firm anticipates a substantial shift for two of the ASX’s largest companies: Commonwealth Bank (CBA) and BHP. Over the next five years, Regal expects CBA stocks to decline while BHP’s shares surge, both potentially trading at around $100 per share. This follows BHP’s shares rallying over 30 per cent to a record $68.77 this year, driven by robust copper prices, making it the ASX’s most valuable company ($308 billion). Conversely, CBA has seen a 6 per cent decline to $152, its market capitalisation at $253 billion amid concerns over credit demand, property adjustments, and competition.
Regal believes this divergence marks the beginning of a multi-year trend. Investment director Charlie Aitken noted the $100 scenario, once improbable, now appears more plausible. He suggests Australian banks are vulnerable to private credit sector stresses, indirectly impacted by issues like the Bathla collapse, given their extensive exposure to building and construction. Aitken anticipates sharp increases in arrears, bad debts, and credit card delinquencies. He argues analyst projections for credit growth, margins, and earnings are overly optimistic, concluding the banking sector (23 per cent of the S&P/ASX 200) is entering a period of underperformance not yet reflected in consensus forecasts.
On the other hand, Regal remains highly bullish on copper, viewing BHP, the world’s largest copper miner, as undervalued despite its record trading levels. This optimism stems from unprecedented capital expenditure in artificial intelligence (AI), driving demand for “picks and shovels” sectors like semiconductors, memory, and critically, mined products such as copper. Regal expects this AI-driven investment to funnel into resources stocks, projecting a significant increase in the metals and mining sector’s weighting within global equity indices, currently a modest 2 per cent in the MSCI World Equity Index.
