CommBank Shares Hit Record High Commonwealth Bank shares ... continuing to soar. Commonwealth Bank shares have soared to a record high, with investors continuing their search for yield amid a softening economic climate. CBA shares closed 0.29 per cent higher at $73.86, almost 19 per cent above their levels at the start of this year. The bank has a market capitalisation of just above $119 billion. During the financial crisis, CommBank shares fell as low as $24.07 on January 23, 2009. They have risen 7.76 per cent this month, after edging up 3.47 per cent in June and falling 8.97 per cent in May. RBS Morgans senior trader Luke McElwaine said investors could be flooding into Commonwealth Bank stocks as they continue to chase higher-yielding opportunities. With expectations that in the softening economy, the cash rate could fall further from 2.75 per cent, investors were looking towards CommBank shares, which have a 4.8 per cent dividend yield, he said. For example, NAB had a yield of 6.1 per cent but was seen as more exposed to the economy because of its business banking aspect, Mr McElwaine said. "It shows you the influence of the cash rate where it is versus the yield on these stocks," Mr McElwaine said. But Mr McElwaine said he did not expect banking stocks to keep rising as the economy continued to soften. "If the miners have been hit, the next logical place [to be hit] is things exposed to the economy," he said. One of the biggest [sectors] exposed to the economy are the banks because they are exposed to people's jobs and those jobs are exposed to property. Credit Suisse equities analyst Damien Boey warned that investors' perceptions that banks would be mostly immune from the weakness in the resources sector was wrong. People see the resources side as getting worse and they think that banks don't have any direct exposure to mining and so therefore, they are relatively defensive. "They are seeing the domestic economy as holding up OK, with unemployment not getting out of hand, that the RBA could cut rates and that the government could embark on more fiscal stimulus," Mr Boey said. While banks have little direct exposure to the mining sector, the loss of jobs as the resources boom peaks, coupled with a growing population and a lack of sufficient jobs being created elsewhere in the economy meant the unemployment rate was expected to rise further, he said. There was also some evidence banks were tightening their lending standards again, Mr Boey said. "So even if the RBA does cut rates, there is a big question mark as to whether it will be transmitted to the broader economy in time," he said. Meanwhile, Japanese investors could once again start to repatriate their funds home amid continued weakness in their local sharemarket. "The last time we saw this sort of weakness in Japan, we saw yield stocks in Australia get smashed because the Japanese are major holders of Australian high-yielding companies," Mr Boey said. The Nikkei is down 1000 points in three days. I would have thought some selling is coming for our yield stocks because they are de-risking their portfolios at the moment and it's only a matter of time before capital is repatriated again.