Skip to content

CBA's relentless share price rise is giving active fundies 'heartburn'

With one day left in the financial year, CBA shares are up a staggering 50%, pushing its market cap above $300 billion. But fundies aren't so enthusiastic about it.

Jassmyn Goh
Make us a preferred source
Commonwealth Bank's stock has risen almost 50% over the last 12 months. Shutterstock.

The relentless rise in shares of the Commonwealth Bank has been the defining story on the ASX this financial year.

CBA shares closed on Friday at $185.36 and with one day left in the financial year on Monday, the stock has rocketed almost 50%, pushing up the company's market value to $319 billion.

The rise, which many market observers attribute to passive buying by index funds, has become a virtuous (or vicious) cycle. CBA alone is responsible for a large chunk of the benchmark index's near 10% gains over the past year, which in itself, prompts more buying of CBA.

But the stock is also overvalued on almost every conventional measure, meaning it is giving active fund managers who are not adequately exposed to it enormous headaches.