Global Financials
3.0 Stars - Attractive
Sector Background
- As one of the 11 sectors under the GICS classification system, the financials sector is made up of the banking industry, insurance industry, and other diversified financials
- Banks make up almost 50% of the global financials index as of Nov 2022
What we like about
- In this new regime of higher interest rates, financials, especially banks, can get a boost from higher net interest income.
- Wealth management industry remains on its path of secular growth over the next few years.
- Overall, we believe that the global economic outlook is constructive for further growth despite a potential upcoming economic downturn.
Sector Outlook
- Several of the major banks’ managements shared that they are still expecting to see loan growth in 2023, albeit at slower rates due to slowing economic growth.
- Consumer spending is likely to remain resilient, generally supported by the demand for services as international borders reopen again.
- Investors can expect 16% upside by end-2024, and an average dividend yield of 2.6% per annum while waiting for share prices to re-rate.
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