'The biggest contrarian trade': Should investors continue to shun banks?

clock • 2 min read

Let us be clear: banks remain a big contrarian trade for European investors, even more so than autos.

The banking sector is the worst-performing industry in 2018 and, in the words of Citi strategist Jonathan Stubbs, banks are "at the bottom of 297 global sectors over the past ten years. Banks in Europe remain the world's biggest contrarian trade".  Looking at valuation metrics compared to the market (P/E ratio or P/B ratio), the banks are at, or close to, 30-year lows. At current levels, banks would appear to be pricing in a global downturn and are being given no credit for the significant improvements they have made since the Global Financial Crisis.  For example, Société Générale...

To continue reading this article...

Join Investment Week for free

  • Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
  • Get ahead of regulatory and technological changes affecting fund management
  • Important and breaking news stories selected by the editors delivered straight to your inbox each day
  • Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
  • Be the first to hear about our extensive events schedule and awards programmes

Join now

 

Already an Investment Week
member?

Login

More on Europe

Eurozone inflation dips below ECB target for the first time in over three years

Eurozone inflation dips below ECB target for the first time in over three years

Down to 1.8% in September

Valeria Martinez
clock 01 October 2024 • 1 min read
Investors raise alarm over impact of rising populism on European stocks

Investors raise alarm over impact of rising populism on European stocks

Political gridlock expected

Sorin-Andrei Dojan
clock 26 September 2024 • 4 min read
Partner Insight: Has the European credit cycle been extended?

Partner Insight: Has the European credit cycle been extended?

Derek Hynes, Fixed Income Portfolio Manager and Will Prentis, Fixed Income Investment Specialist at Wellington Management
clock 21 June 2024 • 4 min read
Trustpilot