If stock prices of financial institutions should report on health of the banking industry, American banks would be roughly 70% of February levels. Yet, only few weeks after the outbreak of coronavirus pandemic, stocks of American banks dropped in more than half.
It comes as no surprise as previous crises have thought bank stocks to be careful when there is economic downturn approaching. However, BCA Research’s Chief Strategist Doug Peta believes that the fear of keeping bank stocks were excessive. The Fed will publish its bank ‘stress test’ in the end of this week, and Peta claims that the state of banking sector will turn out to be much better than had been expected.
Peta also believes that it’s still suitable time to buy bank stocks as long-term investment. Even in case when the bank pays no dividends. “It makes it even better opportunity to purchase,” Peta said to Marketwatch.com and expects banking titles to grow in a short time.