(Bloomberg) -- Macquarie Group Ltd. shares lost the most in more than five months as dealmaking in Australia appeared slow to gather pace unlike the activity surge in the US.
Shares in the Sydney-based investment bank and asset manager dropped as much as 4.2% on Thursday, the most since Feb. 13, as it fell short of investor expectations regarding asset sales by its investing arm and transaction advisory.
“The US is turning around faster than Australia in terms of activity levels in the capital markets,” Macquarie Chief Executive Officer Shemara Wikramanayake said on a call with media alongside its annual meeting on Thursday.
“In Australia clients are still looking at things and there is a lot of dry powder in private funds but we haven’t seen the activity levels pick up yet,” Wikramanayake said. She added the bank’s advisory arm was predicting transaction activity “to be up significantly on a challenging year last year, but at this stage the world is mostly seeing that in the US market.”
The CEO has struck a more positive tone on the outlook for dealmaking in recent months, saying confidence is returning as the path for global interest rates becomes clearer. Still, while the firm’s stock is up about 10% over the past 12 months, that’s lagging behind a gauge of global banks and for some investors, the comments weren’t reassurance enough.
“We think the update reads worse than the market expected,” wrote UBS Group AG analyst John Storey, who placed a valuation on the bank that was 4% below Thursday’s opening price. Storey also noted that fees from the bank’s investing arm Macquarie Asset Management were not promising.
Macquarie’s guidance comes amid buoyant commentary from its Wall Street counterparts. Large US banks posted better-than-expected results earlier in July, driven in part by the gains from equity trading.
The bank also said that profit would be supported by an uptick in its commodities business from increased trading activity in North American gas and power. It told investors that performance in the first quarter was consistent with expectations and was broadly in line with a year ago.
“Continued strong client demand across fixed income, currency and commodities should offset continued weak deal flow in Macquarie Capital,” wrote Bloomberg Intelligence’s Matt Ingram in a note to clients.
(Updates headline and throughout with investor reaction)
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