Five Best and Worst Global Financial Stocks, YTD

Last week was one of the worst weeks for many of the world’s stock market indices. The UK’s FTSE 100 was down a massive 26% from the previous week. France’s CAC and Germany’s DAX also plunged over 20% for the week. The Nikkei Index of Japan lost 24%.

Here in the US, the Dow plummeted 18% for the week, the worst in its history.The S&P 500 Index also declined 18% for the week. Financial stocks were some of the worst performers last week. In the US, the S&P Financials Index is down a horrendous 49.70% year-to-date.

Given the above events, I wanted to check which foreign bank stocks were the best and worst performing year-to-date.

Back in September, I wrote an article titled “By How Much Have Foreign Bank Stocks Fallen?” which showed how much foreign bank stocks had fallen after the recent high reached in October,2007. At that time, HBOS plc (HBOOY.PK) of UK was the loser with a -71.76% return and the two stocks that were down less than 10% were First Bancorp (FBP) of Puerto Rico and Hang Seng Bank (HSNGY.PK) of Hong Kong.

Now let's take a look at the five best and worst performing banks year-to-date.This list does not take into account dividends paid during this time period.

The Five Best Foreign Bank Stocks(as of Oct 10,2008):

S.No.	Bank	Ticker	Year-to-Date Change
1	HSBC Plc	HBC	-18.18%
2	Mitsubishi UFJ Financial	MTU	-28.72%
3	Mizuho Financial	MFG	-36.23%
4	Banco Macro	BMA	-38.72%
5	Santander Central Hispano	STD	-39.51%

The Five Worst Foreign Bank Stocks (as of Oct 10,2008):

S.No.	Bank	Ticker	Year-to-Date Change
1	Royal Bank of Scotland	RBS	-83.39%
2	ICICI Bank	IBN	-77.48%
3	Bank of Ireland	IRE	-76.97%
4	Allied Irish Banks	AIB	-75.14%
5	Llyods TSB	LYG	-66.80%

The data in the above list was developed based on the NYSE traded stocks only. If OTC stocks were included, HBOOY is the worst stock since it is down 87.3% so far this year. But it should be noted that HBOOY is being acquired by Llyods Bank (LYG). So HBOOY will trade after the merger is over.

Analysis:
1. It is interesting to see HBC of UK being the best stock in the above list. HBC might be the best British bank to add to one’s portfolio at these levels.

2. Japanese banks are holding up well compared to their European and American peers.

3. RBS is the worst performer in the list. Last week alone the stock collapsed a whopping 61% in London trading.

4. ICICI Bank (IBN), the largest private sector bank in India is fighting to restore investor confidence there. Last week it fell 20% in trading in India. To allay depositor fears, the bank sent text messages to customers’ cellphones today saying “the bank is well capitalized with good liquidity. Please do not listen to baseless rumors.” So it is not surprising to see IBN ADR down nearly 78%.

Disclosure: Long LYG, RBS and BMA.

Comments

[Menachem Be...:]

It looks like a case of fraud to me when six weeks ago Lloyds TSB management could issue the following statement- " Against this backdrop, Lloyds TSB continued to deliver good growth momentum in all its core businesses and is well positioned for a lower growth environment.
Given this strong performance and our confidence in the Group's future earnings performance, the board has decided to increase the 2008 interim dividend by 2 per cent to 11.4 pence per share. This increase demonstrates the strength of the Group's business model, balanced with a level of caution on the outlook for the UK economy.'"
Now holders of common shares are in jeopardy. Lloyds it seems needs a government bailout that will suspend dividend payments to holders of its common stock for a minimum of five years. However the government, for its largess, will realize a 12% p.a. return on its investment.
Shareholders of Lloyds would be INSANE to vote yes on the proposed merger and I, for one, am looking for a good lawyer!

2008 Oct 13 10:49 AM

[David Hunkar:]

Yakov
I agree with your comments on LYG's management. Lets see how things unfold.
-David

2008 Oct 15 08:52 PM

[b3rkut:]

something interesting i noted:

4 out of the 5 worst performers were from the UK!

Should this tell us something? Or is this just a great time to buy them?

2008 Nov 15 09:03 PM

[David Hunkar:]

b3rkut
Actually only 2 in the above worst list are from UK. IRE and AIB are from Ireland. But the UK economy is in the worst shape in many years. I would wait for next year to buy any British stocks.

2008 Nov 16 12:31 PM