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Moving Average Analysis of FEZ’s Banking Industry

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Banking industry

The SPDR Euro Stoxx 50 ETF’s (FEZ) banking industry provided a return of -0.75% on Thursday, December 31, 2015. Banking stocks like Banco Santander (SAN), Deutsche Bank (DB), Unicredit (UNCFF), BNP Paribas, ING Groep (ING), and Societe Generale returned -1.1%, -0.7%, 0.1%, -0.68%, -1.3%, and -0.5%, respectively, on that day. The Financial Select Sector SPDR ETF (XLF) returned -1% on that day.

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Reasons behind the performance

The continuous fall in commodity and crude oil prices was one of the major factors behind the banking industry’s poor performance in 2015. The banking sector provided high exposure to the oil and gas and metals industry. Due to the continuous fall in commodity and crude oil prices, oil and gas companies weren’t able to pay the debt that they brought from banking institutions. It becomes non-performing assets for the banks. This impacts the banking industry’s profit margin.

Moving averages

The 100-day moving average is a strong resistance point for most of the banking stocks. However, Societe Generale is trading at par with its 100-day moving average. Banco Santander, Deutsche Bank, Unicredit, BNP Paribas, and ING Groep are trading 11%, 12%, 9%, 5%, and 4% below their 100-day moving averages, respectively.

Analysts’ estimates

Analysts’ estimates suggest an upside of 23%, 12%, 19%, 15%, 22%, and 12% for Banco Santander, Deutsche Bank, Unicredit, BNP Paribas, ING Groep, and Societe Generale, respectively, over the next 12-month period from the current levels as of December 31, 2015.

In the next part of this series, we’ll analyze the performance of FEZ’s bottom stocks on December 31, 2015.

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