Related: Political Relief Rally Helps Put Italy ETF Investors at Ease
Market observers project earnings per share growth for European stocks to remain strong and build upon the success over the first two quarters of the year. In the first half of the year, earnings upgrades were broad and far reaching instead of concentrated to specific areas. Additionally, Italian stocks are attractively valued relative to other developed markets. EWI’s price-to-earnings is just over 13, implying significant discounts to U.S. stocks.
“Banks may prefer to work out NPLs internally rather than selling their NPLs, given the higher recoveries that are typically achieved. Recovery rates for sofferenze averaged about 46% for work-outs, according to 2006-2016 data from the Bank of Italy, but only 23% for NPLs that were sold,” said Fitch.
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