Are bank stocks really too cheap to ignore?
Even as a cheap option on a better than expected economic recovery in 2021, only the brave would buy European bank stocks right now.
Most equity investors have turned their backs on European banks since Covid arrived in Italy. They are one of the most under-owned and poorly performing sectors of this most volatile year for global equity.
The SX7P index, which comprises the leading 38 banks from the Stoxx Europe 600 index, hit a year to date high of 148.83 on February 17, 2020.
It had fallen by 44% to 83 on March 16. It has languished below 100 almost ever since, touching a low of 79.27 on September 25, at the end of the week in which the FinCEN papers added another potential worry – of renewed litigation costs – to investors’ already long list of concerns about banks.