Getting latest data loading
Home / Blog / blog / Banking on a better 2019

This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.

Banking on a better 2019

The Banking sector is an important one to have been caught up in the recent sell-off; down 15-26% year to date. That said UK banks have at least outperformed EU counterparts (FTSE350 banks -20% year to date vs. STOXX Europe 600 Banks -30%). Germany’s troubled Deutsche Bank, for example, is in the red by a whopping 56%!

In London, the worst performer is Barclays; the best is HSBC. Bargain hunting traders and investors are currently circling. It is widely accepted that Banks are “risk assets”, given how interlinked they are with the wider economy, the growth of which we are so concerned about.

Higher interest rates are good for banks, yes, but only if economic growth can cope with those higher borrowing rates. That way banks can charge more for what they lend versus what they pay money on deposit. That said, the US may be raising rates, but the ECB is only starting to reverse its QE. And closer to home, the Bank of England remains in wait and see mode ahead of the UK’s scheduled departure from the EU. Whenever than may be.

So do the banks represent a bargain opportunity or a basket case sector? In a way, Lloyds at 51p, -25% year-to-date, to its lowest since the aftermath of the Brexit vote, looks a steal. Especially when you take into account its 7% consensus forward dividend yield. On the flip-side it is also the most exposed to the UK housing market, which is itself hostage to the UK economy, interest rates and, of course, Brexit.

So if you are confident that Brexit is nothing to worry about, then Lloyds could well be oversold at 50p. It tried a 49p handle briefly but is already back at 51p. If you think that there could be worse to come, then perhaps we need to revisit 48p: 5.5yr shallow rising support. Perhaps we need to see 43p again which coincides with rising support since the financial crisis lows of 16.5p.

This is just one example. Royal Bank of Scotland (214p, -23.2% YTD) has more business banking, Barclays (150p, -26.1%) is more international, while both HSBC (648p, -15.4%) and Standard Chartered (602p, -22.8%) are more Asia sensitive, which on the one hand insulated them from Brexit woes, but on the other hand means more exposure to China-US trade war concerns.

So none are fully insulated and performance is rather similar. So too are their dividend yields. While Standard Chartered offers just a 4% yield, the rest of the quintet offer consensus forward yields of 5-7%, all well north of what any of these banking giants will offer you for cash held on deposit.

On a more general note, some 2018 stats on the FTSE which could help both bulls and bears with convincing them that it is either bargaining hunting season or the trend is their friend. As it stands 7% of FTSE100 is down more than 35% year to date; 10% are down more than 30%; 21% down more than 25%; 37% down more than 20%; 47% down more than 15%; 56% down more than 10%; 66% down more than 5%. On a brighter note 25% of the FTSE100 is positive YTD; 18% is up more than 5%; 13% up more than 10% and, lastly, 5% up more than 15%. Something for everyone, Bulls or Bears.

Whether you see the index components offering bargain opportunities or baskets of trouble, and in the same vain as my colleague’s closing comments today, remember this: If you think a share price looks good value and fancy taking a position, there is no obligation to buy the whole position in one go.

Providing it is cost effective in terms of commission costs, why not split the trade? That way, if you buy now and the price falls, you can buy more at a lower price. Think of it as lowering your average entry price if the share price falls. And if the shares do rally, you can always buy more on the way up, buying into momentum. You will at least have bought one lot closer to the the bottom!

After an exciting 2018 may I offer all readers my best wishes for the New Year. If not already, please subscribe to our Gold Pass trading opportunity package to make sure that from next week you receive two short-term trade opportunities per day from each of our Momentum, Breakouts, Support and Range categories, along with much, much more.

As I said last week, consider it a New Year’s resolution, ensuring you are ready to make the most the multitude of trading opportunities which will materialise. Not just in January but in 2019 as a whole.

Here’s banking on a better 2019!

Mike van Dulken, Head of Research, 28 Dec 2018

« Back to Category

This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.


Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance.

Prepared by Michael van Dulken, Head of Research

Comments are closed.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
EXCELLENT

4.81 Average

156 Reviews

George

I have found Accendo staff very helpful,,and informed. I have traded with you for some years now and have no regrets. Keep up the good work!

Posted 1 year ago

Shaun D

since signing up for Accendo I have had two traders, Mark and Sam. I have found both of these to be very informative about how CFD's work and they have made it very easy for me. Since working with Sam (last four months) my trading knowledge has improved and I can make more informative decisions about which Company's to invest with. Keep up the good work Sam.

Posted 1 year ago

Anonymous

I am very happy with the service I get from Accendo Markets and in particular Amrit Panesar. He is very professional and pleasant to speak to and this counts for a lot.

Posted 2 years ago

Shreekant P

Its a good site for dealing stocks worldwide and having good staff.

Posted 2 years ago

Nick W

Krishan Appiah is one of the most dedicated / informative broker I have ever had.

Posted 2 years ago

Thomas I

Since I have been trading with Accendo Markets I have experienced much greater success than has been my experience with other trading companies mainly due to the help given by, what I consider to be my terminal with the trading floor, Mark, who has been most helpful in reminding me of the progress of my positions throughout the day and keeping me in touch with those positions so that I can more easily make successful trades when appropriate instead of missing out on opportunities through lack of attention. He draws my attention to the situations and enables me to make profitable trades. I am very happy with the situation at the moment and am enjoying the experience. Thomas Irving.

Posted 2 years ago

Kartik A

Accendo markets keep me connected with the market and its very well followed by Mr. Krishan Appiah ,which helps me to take certain decision on time.

Posted 2 years ago

Peter p

I have been trading with Accendo Markets and James Abbott my account manager for coming on 5 years now, James Abbott the senior trader of Accendo Markets provides me with up to minute information when I need it and find him very easy and professional to deal with. Whenever I need to trade or am not sure about anything James is always their to help with any queries I may have. The Accendo Platform I find very easy to use and navigate although it has been slightly changed over the years but definitely for the better. Personal when I do trade 90% of the time, I rather telephone call to place my trade dealings and if James is not there to take my call I find others at Accendo like Sam, Lee take my trades and are. All in all everyone at Accendo Markets are amazing to deal with and my relationship with Accendo is just as I like it. Peter Petrou

Posted 2 years ago

Mrs. J

"Our Trader, Aymen Azizi, has been nothing but attentive to our every need throughout our long relationship with him. No issue is too small, full explanations on all our questions."

Posted 2 years ago

Brian R

I have been with Accendo for a long time now, ten or twelve year's, probably more . As I told Sam (my trader) I thought that CFDs were better than sex . I stopped trading for a few years and only started back about a couple of months ago. But it is as if I had never been gone , so to speak. Sam has helped me every step of the way, at my age one forgets things. I have only praise for Accendo and as far as I am concerned the platform is the best . Now I am back trading at 71 years of age, I might even try sex again. Brian Robertson.

Posted 2 years ago

Jim W

I understand how to make a profit with CFDs. I am restricted by the range of companies I have knowledge of. Although, I am not sure that is a big problem. Tom Robertson is a very fine man.

Posted 2 years ago

Rebekah S

Well, I would not be trading without the help of my trader, Sam Alnakkash. He provided a really great overview of Accendo Markets, an insight into trading in general and how to get started in trading online. His advice, support and training has been fantastic all along the way, enabling me to start trading earlier than I would have done had I not had the support. He has also been very adept at understanding me as a client in order to help me achieve my trading goals. I still have a lot to learn and hope I will get there.

Posted 2 years ago

Nick z

I like the updates on shares I trade. Updates from Bloomberg and Reuters plus industry updates and breaking news. I've had Matt Grice and James Abbott and found both to be excellent. I would like to continue a personal service with James. He understands how and which stocks I trade.

Posted 3 years ago

Steve O

Excellent, knowledgable broker interaction and communication, coupled with very good research and analysis.

Posted 3 years ago

William P

Being new to direct trading I needed help and was given all the time and advice that I needed to feel fully able to make decisions on what I wanted to invest in. I asked for and got exactly the type of info I required provided by Tom Cook, who I would recommend to anyone looking for help.

Posted 3 years ago

Mr. W

I have been dealing with accendo for the past 8 years my broker Amrit I find him very helpful when he is there lol and had many offers to change but will not do it Bill Roberts

Posted 3 years ago

Zoran N

Very good all round service! Timely market information. (charts + trends coverage ) On the ball accounts managers ,quickly available and alert . Part of my success owed to my personal manager Mr Sam Springet , than you.

Posted 3 years ago

Mr Brian C

Easy to deal with.....

Posted 3 years ago

Muhammed S

Accendo markets are great for trading cfds and their research is second to none! Aymen manages my account is extremely helpful and always keeps me updated on market info. Thanks again

Posted 3 years ago

Mr Buta B

Always available, whenever I call I get straight through to someone that can and will help. The staff are very knowledgeable, helpful and easy to talk to.

Posted 3 years ago

Stephen B

Aymen Azizi keeps an eye on what is happening in the market and informs me with timely relevancy, email call, and txt.

Posted 3 years ago

.