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Tuesday, May 17, 2022

Why do banks lead the Ibex 35 rises?

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Why do banks lead the Ibex rises?

just two weeks ago The Ibex banks sank with losses of more than 26,000 million in market capitalization, At the time the financial markets are sold, it comes from the following: oil reached 141 dollars per barrel, it was known that inflation was at historic levels and, on top of that, in China the contagion of Covid-19 was intensifying at its highest levels. since the pandemic began.

Everything seems a perfect storm seasoned by an ECB that gave rhythm to the withdrawal of stimuli to fight against inflationary pressures and putting aside the battle for economic recovery. But there a dual message was marked, because, because virtually, a rate hike was closer, even in 2022, good news for banks.

CaixaBank annual share price

CaixaBank annual share price

Since last March 10, the increases have been maintained for the sector, which also since last week has added to the improvement in the situation with an Ibex that has been recovering with up to seven positive sessions Marking his best progress since something more than last year. With this expectation, the banks have placed themselves first in line on the Ibex.

So we see how cash bank earn and 31.5% so far this year after overcoming levels from before the war broke out. I placed him Sabadell Bank, I anticipate above 29%although it still remains negative in the face of the conflict. bench between whole and 21.1% and advances positions such as Caixa Bank. While the banking sector, the Ibex banks gains an annual 11.3% while the Ibex still cut 3% since last January 3rd.

Banco Sabadell annual share price

Banco Sabadell annual share price

As we see that not everyone is in that Top5 of the selective. And it is that, as happens in the market, the horizon of the entities is not a clear path, much less of risks. At the moment the first accolade has come from the ECB. Andrea Enria, chairwoman of the ECB Supervisory Board, highlighted at the industry conference organized by Morgan Stanley that European banks are resilient to the implications of the Russian war, because his exposure to the country is, in general, reduced, although he warned of the indirect impacts of the conflict.

A precaution that also boasts Rent4. the financial analyst Nuria Álvarez draws attention to the persistence of uncertainty in the sector due to the current situation, and points out that given the possible impact of those derived from the war, the quarterly risk cost guidelines could be modified in the second. Although he emphasizes that he hopes that the best performance of the sector on the stock market is maintained in the short term.

Bankinter annual value price

Bankinter annual value price

meLige between the banks to Sabadell, with a potential of 36%, followed by BBVA first for the visualization of the fulfillment of its Strategic Plan and the quote in attractive multiples. The second, better vs. Santander Bank and CaixaBank, highlighted, for the mayor capital strengthsee the visualization of capital generation and a Strategic plan based on organic growth.

Regarding the Ibex cap, CaixaBank reflects the shortest path granted by Renta4 with a target price of 3.31 euros and hold up the neutral of JPMorgan with 2.65 euros of POits last two recommendations, which cut the levels above two euros that Exane BNP and Santander marked on March 9 and 10, in both cases overweighting the value, with target prices of 4.10 and 4.50 euros per share, Respectfully.

And while JPMorgan cuts the target price of all Ibex banks, from Jefferies come the changes, generally positive, with improvement in their recommendations except for BBVA, which is reduced to 7.40 euros per share, but with great potential for CaixaBank to reduce its recommendation to 3.5 euros per share.

even so, the financial institutions themselvesas in the case of the previous two and Santanderhave sent documents to the National Securities Market Commission to put on the table the risks involved, not only for entities and the Spanish economy in general, but also for the world economythe effects of Russia’s invasion of Ukraine.

Yes, ultimately we already know that inflation will be the extra cost that we are already paying in Spain, from electricity, to fuel, passing through all other petroleum derivatives and the increase in the cost of products, especially food and services. This affects the economic situation, with lower growth and a plus: the deterioration of consumer confidence, essential for banks. Meanwhile, a rate hike would be more expensive and possible financing problems.

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