The stock price is down 25% from the peak in March 2019 and is pushing towards dangerous levels that could make many fund managers to reverse their long-term views. Despite the stock is down 25% the enterprise value to total assets ratio is still close to all-time highs reflecting a high degree of confidence in the value of the balance sheet and thus future cash flow generation. If these expectations are shattered next week at the earnings release then the crisis could become severe.
UBS sends a warnings shot to Europe’s banks
UBS shares are down 5% as the bank misses fiscal year profitability and cost targets in addition to trimming its mid-term goals. UBS has been hit by wealth management outflows, negative rates and poor performance in its investment banking division. This obviously sends a warning to investors if they thought overweight European banks was a good idea. Negative rates will continue to haunt European banks until the ECB changes its mind on negative rates.