CBA and Rio: The market has one wrong

In marking up the share price of the Commonwealth Bank (CBA) to over $70 and slashing Rio Tinto’s share price to $55, the market is making a judgement on both businesses: that CBA will thrive and Rio struggle.It’s an easy conclusion to draw. CBA operates a lucrative franchise in Australia with limited competition, sensible management and stable domestic conditions. Rio, meanwhile, is being whacked by falling iron ore prices, a disastrous acquisition and concerns about its largest customer, China. The market's verdict appears, at first glance, entirely sensible.Yet much of CBA’s own success depends on the success of the domestic...

In marking up the share price of the Commonwealth Bank (CBA) to over $70 and slashing Rio Tinto’s share price to $55, the market is making a judgement on both businesses: that CBA will thrive and Rio struggle.

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