The unloved sector yielding attractive opportunities

Financials still tainted by post-crisis sentiment

It is more than 10 years since the Global Financial Crisis. You might have thought that the financials sector would have rebounded since then and would be back in favour with investors.

However, the share prices of many financial stocks, and banks in particular, have been underperforming broader market indices. Specifically, the discount of the financials sector relative to the broader market is as wide now as it has been in 2012 and 2016. There is a lingering negative sentiment towards the sector. After all, for many of us, the memories of crashing banks and insurance companies remain unpleasantly vivid. In the near-term the slowing global economy may hinder fortunes of financial stocks. Interest rate rises (which give banks the opportunity to expand margins) loo...