Go to the Globe and Mail homepage

Jump to main navigationJump to main content



Manulife among 10 financial stocks with double-digit gains Add to ...

<p>Are big financial companies' stocks, many with double-digit gains this year, doing a dead-cat bounce or are they early on the path to steady recovery due to investors' renewed confidence in the beleaguered sector? </p> <p>Maybe both, because financial services was the worst-performing industry last year, losing 18.4 per cent, and banks and insurers had nowhere else to go but up. </p> <p>But also because investors' fears about the European sovereign debt crisis and its potential impact on the already struggling global economy have waned, and they're finding banks -- in particular the globe-spanning ones -- super cheap. </p> <p>The multi-faceted financial-services sector is up 8.6 per cent this year, second only to the materials industry's 11 per cent gain, while the S&P 500 has a rise of 4.7 per cent. </p> <p>Eric Oja, a bank-industry analyst at S&P Capital IQ, said in an interview that he thinks the financials' run this year "is a short-term rebound" coming off a bottom in October when investors feared an economic disaster as the European crisis was showing no progress. As a result, the sector's shares got pounded and the "worst-case scenario" got priced in. </p> <p>"Since then, there seems to be more clarity about what's going on in Europe," which has proved reassuring to investors, he said. </p> <p>In addition to that, fourth-quarter financial-industry results, although not great, were also a bit of a confidence builder for investors as most banks showed decent results and improvement in key capital ratios that indicate stability. </p> <p>Mr. Oja said he expects financial sector stocks may remain range bound over the near term given their big bounce recently. </p>

More Related to this Story



Most popular videos »

More from The Globe and Mail

Most popular