Book value

DIRECT MARKETS French banks: aiming for book value

  • Red US stock index futures; Nasdaq 100 discount ~2%
  • The Euro STOXX 600 index rose by ~0.7%
  • The dollar is rising; raw ~ flat; gold, bitcoin bath
  • 10-year US Treasury yield slips to ~1.75%

January 25 – Welcome home to real-time market coverage from Reuters reporters. You can share your thoughts with us at [email protected]

FRENCH BANKS: TARGET BOOK VALUE (0925 EST/1425 GMT)

Jefferies has just released a fairly bullish dive in the big three French listed banks and, according to its analysts, there is “massive revaluation potential” at hand.

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“We believe the market is underestimating the RoTE (return on tangible equity) potential of French banks out to 2024,” they write, adding that lenders in the country should benefit from a sharp reduction in payments to the European Union Single Resolution Fund. .

French banks are currently trading well below price to tangible book value (PTBV) with Societe Generale at 0.5, BNP Paribas at 0.7 and Credit Agricole at 0.9.

According to analysts at Jefferies, this could change for the better in the years to come.

“We expect French bank stocks to revalue significantly towards TBV (and above) once investors realize that French banks can sustainably achieve a double-digit RoTE,” conclude- they.

Other factors that could help boost their shares include shareholder returns of 7-8% via dividends and buybacks.

The momentum should also be supportive for French banking stocks as they prepare to unveil strategic updates this year.

South Dakota

(Julien Ponthus)

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DESPITE MONDAY’S NASDAQ REVERSAL, INTERNALS STILL UNDER THE WAY (0900 EST/1400 GMT)

The Nasdaq Composite (.IXIC) staged a stunning reversal on Monday. The tech-heavy index erased a nearly 5% slump to close around 0.7% on the day.

On the positive side, a number of the Nasdaq’s internal strength measures may have reached or be close to washed out levels. That said, they still have some work to do to prove they’ve stabilized.

The Nasdaq McClellan Summation, which is based on rising and falling issues, improved from its low for the day, but still closed for an eighth straight session, at -5,987. has yet to cross its March 2020 low of -6,207, but it remains below its 10-day moving average. Read more

The Nasdaq New High/New Low (NH/NL) index ended at 12.6%, just one tick above its low of 12.5% ​​on December 6, 2021:

IXICNHNL01252022

It now remains to be seen if this is a sufficiently washed out reading for this metric, but it still has room to fall to the previous major lows.

It should be noted that it bottomed on March 23, 2020 with the Nasdaq pandemic low of 1.2%. It hit a low of 1.6% just two trading days (tds) after the market low on December 24, 2018.

In early 2016, the NH/NL index bottomed out on January 21 at 2.4%. It then converged bullishly over the next 15 tds towards the final low of the composite.

In 2011, this measure fell to 3.5% on October 4, one trading day after the composite index bottomed on October 3.

Its lowest reading on record, using Refinitiv data dating back to mid-1995, occurred during the financial crisis. On November 24, 2008, it fell to 0.5%. It set a low just above 0.9% with the major Nasdaq low on March 9, 2009.

Meanwhile, amid heightened volatility, the Nasdaq is looking to kickstart Tuesday’s session on the back foot. CME e-mini Nasdaq 100 futures are down about 2% in premarket trading. Read more

(Terence Gabriel)

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Terence Gabriel is a market analyst at Reuters. Opinions expressed are his own.

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