Since the global financial crisis, European banks have been the target of widespread negative investor sentiment. Poor profitability combined with risky capital ratios has caused an enduring belief in a mass European banking crisis. While it is true that many banks in Europe still have alarming balance sheets, I believe sentiment is far worse than reality, particularly when valuations are considered. With widespread negative beliefs about Europe, now may be an excellent time to make a contrarian bet.
The iShares MSCI Europe Financials ETF (EUFN) has been in one of the worst performing