Markets: Macquarie's deal desert

Macquarie Group shares have fallen as much as 3.3 per cent after the company said its investment bankers garnered almost a third less business in the three months to June 30 compared with the same period a year ago.

In an statement to the Australian Securities Exchange, Australia’s biggest investment bank said its “capital markets facing businesses continue to experience subdued market conditions”. Macquarie Capital had managed to secure $14 billion worth of deals in its 2014 first quarter, down 29 per cent from the first quarter last year and 26 per cent from the three months to March 31.

At 1133 AEST Macquarie Group’s shares fell $1.27 or 2.8 per cent to $44.45 after falling as low as $44.21. The stock has climbed 25 per cent this year and 83 per cent in the last 12 months, according to Bloomberg data.

The Sydney-based company says “subdued M&A activity (has been) offset by improved equity capital markets and principal performance”.

Macquarie’s fixed income, commodities and currencies unit has benefited from “improved volatility across foreign exchange and some commodity markets resulting in increased client hedging activity and trading opportunities,” it says.

On balance, Macquarie says its investment banking, broking and trading units are as a whole “up significantly” quarter on quarter and year on year in the three months to June 30. The company gave no figures to justify its statement.

The fund management business of Macquarie is also doing better. Funds under management have increased 10 per cent to $379.3 billion. That will probably result in the unit making better profit in 2014 than it did in 2013, the company says.

“Market forecasting makes forecasting difficult (but) it is expected that financial year 2014 net profit contribution from operating groups will be up on financial year 2013,” says Macquarie. The company gave no figures.