rushpinball| The strongest sector in European stocks: European banking stocks that have "turned around"

Source: Wall Street

Since this yearRushpinballThe cumulative share prices of Italy's UniCredit Bank, British National Westminster Bank and British Barclays Bank have all risen by more than 30%, while the share prices of many banks, such as Deutsche Bank, have also set a record.RushpinballIt has been a new high for many years.

After years of downturn, European bank stocks have ushered in a recovery.

Major European stock indexes closed at record highs on Friday, on track for their biggest weekly gain since late January, as increased bets on interest rate cuts in the region and a strong earnings season boosted risk appetite.

The long-term performance of bank stocks is particularly impressive. The shares of Italy's UniCredit, NatWest and Barclays have all risen more than 30 per cent so far this year.

Some analysts pointed out that European bank stocks have basically outperformed large US bank stocks this year, and the share prices of many banks, including Germany's largest bank, Deutsche Bank, have also hit multi-year highs.

Gustav Moss, a partner at activist investor Cevian Capital, said:

In general, European banks are cheaper, better capitalised, more profitable and more shareholder-friendly than they have been for years. Not surprisingly, there are a lot of new investors interested in identifying winners in the industry. "

Banking has become the "most attractive" sector of European stocks.

Bank stocks are getting hotter.

A recent survey by Bank of America (Bank of America) found that regional investors are becoming more enthusiastic about European banking, with 52 per cent of respondents finding it attractive.

UniCredit CEO Andrea Orcel also said that European banks are attracting more and more investors, including more strategic hedge funds and more diversified portfolios.

In the post-epidemic era, the macroeconomic downward cycle superimposes a high interest rate environment, which makes European banks suffer from the impact of high financing costs, declining economic growth prospects and deteriorating asset quality.

In recent years, European banks have successfully emerged from the downturn by implementing stricter operating rules, paying more attention to shareholder returns, and making sustained efforts to reduce costs and write off bad debts in order to improve their capital strength.

Pzena, an investment firm that has invested in big banks such as UBS, HSBC and Barclays, says banks' balance sheets, capital positions and profitability will eventually improve, whether by raising interest rates or changing business models.

As Switzerland and Sweden begin interest rate cuts one after another, the ECB has released its pigeons intensively. Banking profits may fall in the future, but monetary policy rates are unlikely to return to negative levels.

Some analysts expect European banks' share prices to remain modest, with most of them well below the book value of their assets, meaning there is still plenty of room to rise.

Risk reminder and exemption clause

There are risks in the market, so you need to be careful when investing. This article does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any comments, opinions or conclusions in this article are in line with their specific circumstances. If you invest accordingly, you will be held responsible.

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