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BDSwiss | January 17, 2017

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Why the banks are growing - BDSwiss

Why the banks are growing
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Those who invested in rising bank share prices in recent weeks are certainly happy. Deutsche Bank and Co. have all seen significant gains recently. Analysts can give a number of reasons to justify the recent gains, but the question remains, how sustainable are the price increases?

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For a long time, German financial assets were not overly popular with investors. In particular, Deutsche Bank has seen its share of problems this year. Now however, they have seen their share prices rise by 15% in the last week alone. Commerzbank also saw their sahre prices rise by 10% during this time. Throughout Europe things are looking up for the banks. The Euro Stoxx Banks Index, which is comprised of Europe’s most important banks has seen its value increase by 9% recently.

Background and chances

As far as the background of this banking rally is concerned, analysts’ opinions vary. From the hope of financial aid to Italian banks, the extension of the European Central Bank’s purchase of bonds or the election of Donald Trump, everything is considered to have played a role. The fact is that the banks are massively undervalued despite the price rise, when compared to their book value. But this has its reasons. After all, the business is bad and the prospects for the future are not particularly bright. It is therefore also quite possible that the rally of the past few days could be followed just as quickly by losses. Investors who rely on binary options or CFDs can benefit from this. Since the direction in which the price moves is absolutely irrelevant for the amount of profit to be achieved. It is important, however, to keep track of the news situation in order not to miss the ideal entry point. Only if you enter a trend in time, you can really realize the potential profit.

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