wolfstreet.com / by Don Quijones • November 26, 2016
Big Trouble in Emerging Markets.
By Don Quijones, Spain Mexico, editor at WOLF STREET.
Banking stocks in Europe continue to benefit from the gravitational pull exerted by the so-called Trump effect. But the effects have not been felt universally. Monte dei Paschi di Siena, which is at the center of Italy’s banking crisis, has been reduced to a penny stock. The shares of Italy’s other large banks continue to trend downwards. And the problems in other national banking sectors have not gone away; they’ve just been consigned to the background. Such is the case in Spain, where the risks and challenges in the country’s banking system continue to bloom.
Spain’s Very Own Homegrown Monte dei Paschi.
The multiyear decline of Banco Popular, Spain’s fourth biggest bank, has been no less spectacular than Monte dei Paschi’s, having lost 98% of its stock value in the last nine years. The shares are now worth just €0.85 (compared to over €15 in 2007) and continue to shed value. Over 7% of its shares are being shorted by London and Connecticut-based hedge funds.