AMP Ltd (AMP)

AMP Ltd. Overview

Headquartered in Sydney, Australia, AMP Ltd. (ASX; ticker: AMP) is a financial services company founded in 1849 and was incorporated in 1995. AMP’s core operations include providing banking services to more than one million customers across Australia and New Zealand.

The bank’s services include ‘Platforms’ (clients can create a personalised investment portfolio using its ‘North’ platform), ‘Super and Investments’ (superannuation and pension solutions), ‘AMP Bank’ (offers customers deposit accounts and access to loans and transaction accounts), and ‘New Zealand Wealth Management’ (provides wealth management services including KiwiSaver, corporate superannuation, retail investments).

Why Trade AMP Ltd. Shares?

AMP’s Share price rallied considerably in 2024, adding 70% and eclipsing the 7% gain achieved by the ASX 200, a benchmark index for Stocks. Upward momentum has continued so far this year, with the Stock rallying more than 10% and reaching multi-year highs of A$1.79.

Such robust growth raises questions about whether AMP Shares are worth adding to the watchlist at current levels. Despite the Stock being entrenched in a multi-decade downtrend, price action has demonstrated strong signs of bottoming out since early 2020, forming what many technical analysts will recognise as a double-bottom pattern between 2022 and 2023.

Investors also cheered the company’s positive half-year update (six months to 30 June 2024), reporting a 5.4% increase in underlying net profit after tax, reaching A$118 million. While total revenue decreased by 4% to A$641 million, the company saw a 4.1% rise in earnings before interest and taxes (EBIT), which reached A$153 million. Despite the revenue dip, AMP also declared an interim dividend of 2 cents per Share, reflecting its continued commitment to delivering value to shareholders. The positive profit growth and dividend payout highlight AMP’s resilience in navigating challenges in the financial sector.

What Influences the Price of AMP?

• Earnings

Corporate earnings are one of the most significant drivers of volatility in the Stock market. At its core, AMP’s earnings report summarises the company’s performance over the previous quarter and provides ‘Forward Guidance’ – a company’s outlook and forecasts. Investors vigorously monitor these releases for signs of outperformance (underperformance) and trade accordingly. An earnings report that surpasses (falls short of) analysts’ expectations will generally fuel a bid in the (weigh on the) company’s Share price.

• Economy

An economy growing with low unemployment and stable prices (inflation) will likely bolster demand for Stocks. Economic growth drives demand for financial services like wealth management, insurance, and superannuation, benefiting companies like AMP. Conversely, an economy that is underperforming or even experiencing a recession tends to prompt investors to sell Shares amid fears of depressed earnings. Central bank monetary policy, inflationary effects, and investor sentiment toward the financial sector can also significantly affect the Share values of a company such as AMP.

• Market Sentiment

How investors perceive a company can noticeably impact its Share price; bullish (bearish) market sentiment about a particular Stock may strengthen (depress) price action.

Investors who believe in AMP's long-term strategy and growth potential are more likely to buy and hold its Shares. On the other hand, negative market perceptions – whether due to concerns over management, competitive pressures, or past controversies – can lead to a sell-off in AMP’s Shares. Media coverage, analyst ratings, and social media discussions can all influence how investors view the company.

• Regulatory Changes

Changes in regulatory policies or government regulations can directly impact AMP's business operations. Stricter regulatory requirements may increase compliance costs or affect revenue streams, while favourable regulatory changes could provide growth opportunities.

Any significant regulatory shift, such as changes to retirement policies or taxation, can also lead to fluctuations in AMP's Stock price.

• Competitive Landscape

AMP operates in the highly competitive financial services sector, with numerous players offering similar products in wealth management, insurance, and superannuation. The company's ability to maintain or grow market share in these areas is critical for its Stock price performance. New entrants, changes in competitive dynamics, or innovations by competitors can all impact AMP's business prospects. If AMP fails to adapt to shifting market trends or faces stronger competition, it may experience slower growth, which could negatively affect its Stock price.

How To Trade AMP Ltd. (AMP) CFDs?

With the AMP Stock trading at multi-year highs, investors will likely be monitoring its Share price closely. How an investor trades AMP will differ and depend on several factors, including trading style and the strategies employed.

If you are new to investing in the financial markets, the FP Markets Academy can help you learn how to trade Share CFDs (Contracts for Differences). This space is designed with the trader and investor in mind, providing easy-to-follow articles and video guides.

CFDs are a unique and cost-effective way of investing and hedging across all key asset classes. They enable investors to ‘take a position’ in a market without taking on physical ownership of the underlying asset, which includes individual Stocks, such as AMP. Investing through CFDs involves two parties agreeing to exchange the difference between a trade's opening and closing prices. In addition, CFDs are regularly traded with leverage (margin), meaning CFD investors can increase their position size with only a fraction of the total investment value.