CBA rout signals end of banks’ era on ASX: VanEck

Binaya Dahal

Journalist

18 May 2026

VanEck has warned the dominance of Australia’s major banks on the share market may be nearing an end, saying this week’s $30 billion wipeout from Commonwealth Bank’s market value could mark the beginning of a broader rotation reshaping ASX returns through 2026 and beyond.

The $200 billion global ETF issuer said the economic conditions that powered bank outperformance for more than a decade, including low interest rates, disinflation, uninterrupted housing credit growth and low bad debts, have now reversed simultaneously and it is reshaping the investment landscape.

VanEck’s head of investments Russel Chesler said investors were entering a “structurally different earnings environment” that would reward pricing power and earnings resilience rather than simple exposure to index heavyweights.

“We could be seeing the start of a regime shift,” Chesler said. “Australian investors may need to look beyond the big banks to capture the next phase of opportunity on the ASX.”

According to VanEck’s analysis, the ASX is already rotating beneath the surface of the headline index, with materials gaining more than 50% over the past year on stronger copper and iron ore prices, while the S&P/ASX All Tech Index has fallen more than 30% over the same period.

“When dispersion is this high, equal-weighted approaches and active sector tilts do the heavy lifting that beta used to,” Chesler said.

He added that concentration risk in the major banks is now cutting both ways, with Commonwealth Bank alone accounting for around 10% of the index and capable of moving the benchmark materially on earnings updates.

“They have driven the index higher for years. They can drive it lower just as quickly,” he said. “CBA alone accounts for roughly 10 per cent of the S&P/ASX 200.”

“When a single stock can move the benchmark by half a per cent on a quarterly update, you are no longer running a diversified portfolio.”

Despite the shift, Chesler said Australia still screens as relatively attractive compared with global peers, particularly the United States, where index valuations increasingly depend on sustained AI-driven earnings growth and continued capital expenditure.

“If geopolitical volatility subsides and the earnings recovery continues to broaden, Australia could be one of the better risk-adjusted equity trades globally in the second half of 2026,” he said.

But he warned that the thesis only works if investors position themselves in the right parts of the market, saying the current structure remains overly reliant on a narrow group of bank stocks at index level.