The victory of a pro-bailout party at elections in Greece eases the risk of the country leaving the euro zone and is likely to boost European banking stocks, but more action is needed to sustain any rally, according to Exane BNP Paribas.
“In the short term, we should see some strong performance by the banks as a high beta sector, but the sustainability of any rally will depend on the policy follow-through,” the bank’s strategists say in a note.
Within the sector, they keep a preference for Nordic lenders and a global name such as HSBC, while they “begin to look” at UK-listed Lloyds Banking Group and Barclays, arguing the market has “overstated” euro-related risks on those names.
Overall they continue to favour global cyclical stocks over financials, with miners as their preferred beta play, while they short defensive sectors, expecting central banks across the globe to support economic activity in the coming months.
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