Nevertheless, most observers remain optimistic about the stress-test results scheduled for October 26 as member states and the ECB have had a year to prepare.
“I would be very surprised if at this stage the AQR [Asset Qaulity Review] shows the banking sector is in a dismal state,” Teis Knuthsen, chief investment officer at Saxo Bank A/S, said in a Bloomberg report. “Both the ECB and banks have had so much time to prepare for this. Imagine that all the banks are given the green light and told they all look fine. This has not yet been priced into the market.”
A potential positive review would bode well for the Eurozone’s financal sector, along with related ETF, the iShares MSCI Europe Financials ETF (NasdaqGM: EUFN). EUFN, though, includes a 32.5% tilt toward the United Kingdom. The ETF is down 0.7% over the past week and 8.8% lower over the past month. [Tactical Application of Thematic ETFs]
For more information on the Eurozone, visit our Europe category.