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European Banks Lose Shirts In November 2010
The list of the worst performing stocks on the NYSE during November 2010 was dominated by the European banks that are in countries at the center of the latest banking crisis du jour. These countries include Ireland, Greece and Spain.
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Bank of Ireland (NYSE:IRE) is now off 84% from its 52 week high reached in the spring of 2010. The European Union and the International Monetary Fund recently agreed to a multi billion euro bailout of the Irish banking system, with the Irish government reportedly acquiring a large stake in the Bank of Ireland. The stock fell a further 44% in November 2010, as fears of this dilution or perhaps even outright nationalization spread through the markets.
The Running of the Bears
The banking crisis in Europe was not contained to Ireland, as the market is worried that the European sovereign debt crisis will spread to other countries. Banco Bilbao (NYSE:BBVA) and Banco Santander SA (NYSE:STD), two large banks headquartered in Spain, also performed poorly in November, falling 29% and 25%, respectively.
The Spanish government has denied that any bailout of banks in its country is needed, and has taken measures to calm the markets. This includes selling the government's stake in the lottery system and the partial privatization of two airports in Spain. The government is also cutting out benefits to some unemployed workers to help convince the markets that it can control spending.
Another worry for investors is that the Spanish banking sector has a significant exposure to Portugal, and both the Spanish government and several major banks in that country have to come to the market in the spring of 2011 to rollover debt.
Greek Banks Still Struggling
The debt and liquidity problems of Greek banks have been the center of media attention all year, and this concern is reflected in the price of the National Bank of Greece (NYSE:NBG). The stock is off 77% from its 52 week high and fell an additional 26% in November. Investors may have been worried about earnings for the National Bank of Greece, which were released at the end of the month. The bank reported a 74% decline in earnings in the first nine months of 2010.
One Non-Financial Joins the Decline
One non bank stock made the list of worst performing stocks on the NYSE for November, as Alcatel Lucent (NYSE:ALU) fell 21% during the month. The company is in the same business as Cisco (Nasdaq:CSCO), which earlier in November provided a disappointing outlook for future business. Alcatel Lucent might have declined in sympathy as investors expected similar weakness for the company in 2011.
Bottom Line
Commentators like to say that the market climbs a wall of worry, and it is clear that the latest worry is the possible emerging sovereign debt crisis in Europe. These fears led to the trashing of most European bank stocks in November 2010. (For related reading, see How Countries Deal With Debt.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
Bank of Ireland (NYSE:IRE) is now off 84% from its 52 week high reached in the spring of 2010. The European Union and the International Monetary Fund recently agreed to a multi billion euro bailout of the Irish banking system, with the Irish government reportedly acquiring a large stake in the Bank of Ireland. The stock fell a further 44% in November 2010, as fears of this dilution or perhaps even outright nationalization spread through the markets.
The Running of the Bears
The banking crisis in Europe was not contained to Ireland, as the market is worried that the European sovereign debt crisis will spread to other countries. Banco Bilbao (NYSE:BBVA) and Banco Santander SA (NYSE:STD), two large banks headquartered in Spain, also performed poorly in November, falling 29% and 25%, respectively.
The Spanish government has denied that any bailout of banks in its country is needed, and has taken measures to calm the markets. This includes selling the government's stake in the lottery system and the partial privatization of two airports in Spain. The government is also cutting out benefits to some unemployed workers to help convince the markets that it can control spending.
Greek Banks Still Struggling
The debt and liquidity problems of Greek banks have been the center of media attention all year, and this concern is reflected in the price of the National Bank of Greece (NYSE:NBG). The stock is off 77% from its 52 week high and fell an additional 26% in November. Investors may have been worried about earnings for the National Bank of Greece, which were released at the end of the month. The bank reported a 74% decline in earnings in the first nine months of 2010.
One Non-Financial Joins the Decline
One non bank stock made the list of worst performing stocks on the NYSE for November, as Alcatel Lucent (NYSE:ALU) fell 21% during the month. The company is in the same business as Cisco (Nasdaq:CSCO), which earlier in November provided a disappointing outlook for future business. Alcatel Lucent might have declined in sympathy as investors expected similar weakness for the company in 2011.
Bottom Line
Commentators like to say that the market climbs a wall of worry, and it is clear that the latest worry is the possible emerging sovereign debt crisis in Europe. These fears led to the trashing of most European bank stocks in November 2010. (For related reading, see How Countries Deal With Debt.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
by
Eric Fox
Eric J. Fox, CFA, is a freelance financial writer and has previous experience working in the asset management industry as an equity analyst and portfolio manager on the buy side. His favorite area to write on is the energy sector and he keeps current on the industry by reading Haynesville Shale, Permian Oil and Gas and various other blogs.
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