Is the UK banking sector in for a rocky ride?
News that a number of companies in the US failed the regulatory stress test is already common knowledge but the situation in the UK is very much different with the Treasury unwilling to release UK data. As we covered in one of our earlier post, this will be a dream scenario for many of the "shorters" in the market, you will be able to spread rumours and counter rumours making money by selling stock and buying back lower down.
While there have been various changes to the rules of "shorting" this does not mean to say that it is impossible to make money especially in these volatile and uncertain times. It is highly unlikely we have seen the worst of the bad news in the UK banking sector, aside from the stress test results, as there will be a significant lag between results of yesteryear and the recovery in the future. Depending upon the mood of UK investors at the time they may look forward to the future with hope or the run for the hills over concerns about the recent past!
Either way the government's decision not to release stress test results has bought the sector back into "play" and we will no doubt see a number of rumours and counter rumours circulating the city over the next few weeks and months.
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