Analysts at Bank of America (BofA) see positive signs for bank stocks ahead of the US election.
The note highlights how the election could significantly impact stock performance, noting the performance of Mexican and Indian stocks in response to last week’s election surprises.
BofA believes the upcoming US election will be no different as it will impact investor sentiment based on expected changes in regulations, taxes and economic growth.
Historically, BofA said, “maintaining exposure to bank stocks during election periods has paid off.”
Analysts looked at results over the past eight election cycles (since 1992) and found that bank stocks rose in six of the eight election cycles (since late May), gaining an average of 2.9% and outperforming the same period by 2.6. percentage points.
That trend continued after the election: Two months later, bank stocks were up in seven of eight cycles, averaging 6.7% gains and once again outperforming the S&P 500 by a significant 4.3 percentage points.
BofA concluded by expressing confidence in bank stocks, saying, “In the absence of a macro shock, we expect bank stocks to be well represented in the U.S. election.”