Computershare and QBE Insurance are experiencing strong rallies at present, the catalyst being higher interest rates in the US. The FOMC meeting on the 14th of December may provide a short term cap in the bond yield rally, if this occurs QBE and CPU will likely run into resistance.
QBE 1H16 NPAT of US$265m was 10% below consensus. Growth in insurance margins remain elusive and return on invested capital shows little sign of improving in the low bond yield world.
Forecast FY17 dividends are likely to be at or near US$0.51 per share, placing the stock on a forward yield of 5%.
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