Goldman Sachs Group Inc. is telling investors to buy European bank stocks for the first time in more than 16 months. Bond buyers are taking the opposite view on concern that policy makers will fail to staunch the debt crisis. Banks in Spain, Italy and Greece have led the Bloomberg Europe Banks and Financial Services Index 16 percent higher since November. While shares of Spain´s Banco Santander SA rallied 23 percent and Italy´s UniCredit SpA jumped 28 percent, both lenders had to offer investors record premiums over government debt when they sold covered bonds in the same period. Equity investors are betting political leaders will bridge their differences over the mandate of the European Financial Stability Facility and stop the region´s debt crisis from spreading. Bond buyers are skeptical that the talks will succeed and concerned banks may be forced to accept losses on the more than $2 trillion of loans and other assets they have in Greece, Ireland, Italy, Portugal and Spain. Analysts say that while equity investors may be right in the short term, they risk ignoring a jump in funding costs that will erode future profit. "The fundamental split here is about whether policy measures in Spain and the rest of Europe are going to work in halting the crisis -- or not," said Huw van Steenis, a banking analyst at Morgan Stanley in London.
0 comments:
Post a Comment