European Banks’ “Race To The Bottom” Is Worst Since 2011 Crisis
by Jan-Patrick Barnert and Michael Msika
ZeroHedge.com
Fri, 12/14/2018
The EU300 Billion Race to the Bottom of Europe: Taking Stock
As we approach the end of a dismal year for European stocks, the question is: which sector had the worst year of them all?
With a few trading sessions left before the end of 2018, banks and autos are in a tight race to the bottom. As of Thursday’s close, lenders are the biggest losers, with a quarter of their market value down the drain, a wipeout of roughly 300 billion euros in shareholders’ money.
Banks haven’t seen such a bad year since the heat of the euro-zone sovereign debt crisis in 2011.
As the final ECB meeting of the year confirmed, the central bank will keep rates unchanged at least until next summer and the grim outlook for the sector highlighted in one of our earlier Taking Stock columns remains valid.
Any attempt by the sector to break out from its downward trend in 2018 has so far failed.
Perhaps it’s not a surprise as banks face a wall of worry from investors and nothing seems to be able to help them move forward. Repeated calls from some analysts that the sector is cheap hasn’t triggered any significant buying. A good example is Credit Suisse’s buyback and dividend announcement on Wednesday. That didn’t even raise investors’ interest with the stock hovering near its low. While any return of capital to shareholders is welcome, the dark clouds over its investment banking outlook seemed to weigh more.
Here’s the grim silver lining:
…it doesn’t matter much to the rest of the market: Since the financial crisis a decade ago, the influence of banks over the broader European gauge has fallen dramatically, to a point where they now barely move the Stoxx 600.
The Rest…HERE
