The woes of the UK banking sector continue this morning, with Standard Chartered Bank reporting their first annual loss since 1989. Whilst the severity of the loss came as a surprise, the fact that the bank’s main operations centre around Asia possibly points to the catalyst behind this. The performance of their shares illustrates this perfectly, with a fall from 900p in August 2015 to 396p this morning, a fall of some 56%. This is arguably not the kind of performance you would expect from a blue chip international banking stock. With the shares having fallen by this magnitude, at what point do they constitute an opportunity in valuation terms?
This is a difficult question, and in the first instance I would suggest that the shares fully reflect the negative outlook of the company.
However, on the converse side, an area which interests in value terms comes in from the low made in the 1998 Asian banking crisis: a key level of support at 290p. Admittedly this is over 100p from the current share price, but with the shares having broken the 2008 global credit crisis low of 500p, this is what I would class as the next area of significant support.
Jordan Hiscott, Chief Trader
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