Wonderful 7? Try the wonderful 47 for the size

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Rola Khaleda, FT editor, chooses her favorite stories in this weekly newsletter.

We forget the wonderful seven. The large American technology collection barrier has developed a reputation for being the city’s only game for investors. But some of the least trendy stocks were working better. It is time to take a closer look at the wonderful 47.

The Banks Stoxx 600, which tracks 47 of the largest banks listed in Europe, has returned slightly more than 200 percent since the beginning of 2022 in the rise in stocks and profits, according to Bloomberg data. The so -called wonderful seven managed to about 190 percent during the same period.

Partially amazing statistics is a reminder of the importance of choosing the appropriate time chain – returning to the beginning of 2015 and the returns of the banking sector are largely fixed; MAG 7 rises to 2700 percent. However, it highlights that, sometimes, the arrows beaten in sharing their heads again.

Should the gathering continue? When the shares have a blatant operation, it is easy to get negatives. After all, no one loves to buy at the top of the cycle, and the environment is definitely more difficult. The banks moved forward in 2022 for the same reason, technology shares decreased that year – interest rates began to rise. But prices decrease again, which will burden their weight on profitability.

However, they do not return to scratch. Analysts expect shared shares across the index to a decrease from 12 percent to 11.4 percent in 2025 and 11.1 percent in 2026. This is still twice as much as they managed for most of the past decade.

In terms of assessments, it is also easy to think that banks look Toppy. The index is traded near the book value, which is much higher than an average of 10 years and is 0.7 times.

But then, as the MAG 7 chart shows, choosing the right start date makes a big difference. Europe banks It was a job defect for more than a decade. In a long -term horizon, the average reservation price is closer to 1.1 times.

Or compare to the rest of the world: The KBW US Bank is currently trading approximately 50 percent for reservation, while the global MSCI Acui banks are 1.2 times. Comparing banks based on price profits show similar trends.

Another important procedure is How much criticism Companies can return. This sector is currently the total payment return of approximately 10 percent, and it is much higher than the historical average. This also supports assessments.

The scope of the shares has been assisted over the past few years with a very weak starting point. Due to the changing interest rate environment and uncertainty about everything from commercial wars to local elections, it will be surprising that they can maintain the pace of spines in the past few years. But there is still room for expansion before the assessments become very great.

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