European banks: good buy or goodbye?
Singapore Sales Trader
The first half of 2018 was all about the Trump administration's moves, but there remains a great deal of uncertainty in Europe, and this extends beyond the political tensions raised by Italy's new populist government.
Adding to the European factor, we have the ongoing Sino-US trade war weighing on markets this quarter. Britain’s exit from the EU will also have a significant impact on politics and the economy across Europe as a whole.
One of the biggest impacts will probably be felt in the financial industry, particularly in the investment banking sub-sector where London is a major hub.
In the UK financial services sector, the vote to leave the EU has fueled perceptions of uncertainty and depressed risk appetite. Lower risk appetite is likely, in turn, to lead to a squeeze in business investment and hiring, and a renewed focus on cash and cost control among corporates. Elevated uncertainty is likely to weigh on mergers and acquisitions, IPO activity, and inward investment.
Deutsche Bank lagged its European peers as the firm's Q1 results hit the company’s performance; shares at that point stood around €11.26.
Deutsche Bank shares now trade around the €10.88 level, with the downtrend visible on the chart below.