Tactical opportunity in Europe's banks
EUFN•Morgan Stanley equity strategists said the recent selloff in French banks may present a buying opportunity. Credit Agricole, BNP Paribas and Societe Generale have fallen 18% to 23% from their August highs, while the Euro STOXX banks index is down 8%.
1. French banks fall
Morgan Stanley equity strategists said the recent selloff in French banks presents a possible buying opportunity, noting that moves across financial markets resemble previous bouts of weakness. Concerns about France's budget and a parliamentary stalemate ahead of next year's presidential election have weighed on French assets, with bond yields at their highest in years and France's main stock market underperforming European peers.
2. Strategists cite past moves
Credit Agricole, BNP Paribas and Societe Generale are down between 18% and 23% from their respective August highs. Morgan Stanley said French banks fell between 12% and 25% after President Emmanuel Macron called a snap election in June 2024, and described the current pullback in European banks as an attractive buy-the-dip opportunity.
3. Sector ranking
Morgan Stanley's sector model ranks banks as the second-most attractive sector, after energy, citing earnings upgrade trends, improving analyst price targets, valuations and shareholder payouts.
