At time of writing, the share price of AMP Ltd [ASX:AMP] is down 1.08%, trading at $1.84.
This movement is taking place on a day where the ASX 200 shed over 100 points in the first 15 minutes of trading.
So it’s not surprising that AMP shares were caught up in the viral fear.
Looking at the weekly chart over the last five years tells a painful story for AMP shareholders:
Source: tradingview.com
Switching to the daily chart for the last year, we can see that the AMP share price is now in a range:
Today we present the case for it staying in this range for a long time, with downside risk.
Current AMP share price reflects a variety of factors
Here’s the tech angle for why the AMP share price may stay in this range:
- It is simplifying its business structure dramatically, reducing its seven separate super funds into two (according to the AFR)
This will likely require a significant effort behind the scenes to change the way their systems work.
These changes may take a while to show up in results.
Against this backdrop, companies that merge wealth with tech could continue to benefit.
For example, it’s interesting to see the rise of Class Ltd [ASX:CL1] of late, which announced an acquisition today (Tuesday).
And here’s the regulatory angle:
- The royal commission is over and there likely won’t be an election for at least another 18 months or so (barring unforeseen circumstances)
AMP couldn’t get the sale of its Life Insurance business over the line — but AMP’s restructure points to its intention to still get this done.
But what of AMP Capital?
They have around $202.2 billion in funds under management worth a potential $5 billion.
A recent AFR article by Karen Maley speculates that now could be the time to ‘liberate’ this arm of the business.
It’s a behemoth that seems to not be getting economies of scale from a diversified business model.
Small competitors are carving out niches by doing one part of the money game well by using tech and sticking to their strengths.
As a result, the AMP share price may stick between $1.80 and $2.00 for a good chunk of time.
It may get a jolt from the sale of its life business, or it may not.
Bottom line — the market seems to be saying that an AMP share price renaissance is increasingly unlikely.
You can learn about the types of companies that are chipping away at AMP’s foothold in the financial world here.
And if you want to get our editor’s insights direct to your inbox every morning, be sure to consider a free Money Morning subscription.
Regards,
Lachlann Tierney,
For Money Morning
