As Banking Concerns Abate, Get Triple Exposure to European Equities

The dust appears to be settling from the recent bank failures over the past few weeks, giving investors more confidence. With the rescue of European bank Credit Suisse, specifically, traders can look to get bullish on European equities once again.

Confidence in the banking system was on shaky ground after Credit Suisse was in dire straits, but global investment bank UBS swooped in to save the day. Emergency talks and the backing of the Swiss government resulted in UBS taking over Credit Suisse, and for European equities, this couldn’t have come at a better time.

“During the three last years, the resilience of the European banking system was very strong based on very good solvency and very good liquidity and very good profitability,” said the Chair of the European Union’s banking Single Resolution Board, Dominique Laboureix, in an interview with CNBC.

“Based on that, I really believe there is good resiliency in our banking system. That does not mean that we don’t have to be vigilant,” Laboureix added.

As mentioned, the timing is auspicious for traders in European equities. The MSCI Europe index dropped unceremoniously after the news of Credit Suisse hit the financial markets, but it’s recovering en route to its previous level and potentially past that if economic factors are aligned in its favor.^MSEUR Chart

Triple the Leverage on European Equities

For profit maximization, traders can use leverage built into exchange traded funds (ETFs) rather than trade via a margin account. This is inherent in leveraged funds from Direxion like the Direxion Daily FTSE Europe Bull 3X ETF (EURL).

With its triple leverage, EURL seeks daily investment results that are equal to 300% of the daily performance of the FTSE Developed Europe All Cap Index. The index itself is a market capitalization-weighted index that is designed to measure the equity market performance of large-, mid-, and small-cap companies in developed markets in Europe.

The fund shot past the 30% mark earlier in the year despite inflation concerns. It fell below a 10% gain amid the banking crisis (just like the MSCI Europe Index), but has since recovered for a year-to-date gain of over 26%.EURL Chart

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