The Macquarie Group Ltd (ASX: MQG) share price has been a force to be reckoned with over the past year. In fact, the Australian investment bank has returned twice as much as the best performing of the big four banks during this time. In quantifiable terms, Macquarie has gained ~47% in 12 months.
Despite the company’s already impressive run, one fund manager remains bullish on a longer-term view. The team at Perennial Partners discussed a few key reasons as to why they expect more good times to come for the Macquarie share price in their latest monthly report.
Why is the Macquarie share price appealing to this fund manager?
Recently, Perennial Partners shared its overview of the ASX market in its October monthly report. Overall, the sentiment was fairly positive as the economy begins to reopen on high vaccination rates. From there, the fund manager honed in on appealing opportunities in the market, one being the Macquarie Group share price.
During October, Macquarie shares appreciated 8.7% in value after reporting a record first-half profit of $2,043 million. There was a lot for investors to like in this result as net profit contributions from the company’s various divisions all experienced strong growth.
In explaining the strong momentum behind Macquarie, Perennial Partners noted two dominant factors providing favourable operational conditions.
Firstly, the high level of merger and acquisition (M&A) activity fuelled by demand for returns is benefitting Macquarie. This is a positive for the business in two ways. The investment bank is able to sell its own managed assets for a premium price. Additionally, the high demand for its M&A advisory services is also boosting revenue.
Secondly, a volatile commodity market has enabled high returns from within the Commodities and Global Markets (CGM) business. In particular, the energy shortage across multiple countries has been a major opportunity for the company’s commodities trading operation.
That being said, the long-term catalyst for the Macquarie share price is believed to be its exposure to the energy transition. As stated by Perennial Partners in the October report:
On a longer-term view, Macquarie is very well placed to benefit from the energy transition as a result of its established position as a global leader in the financing and development of renewable energy assets and other infrastructure related to the energy sector.