We expect earnings growth for financial equities to improve further in 2019, supported by a strong economic backdrop, after many financial companies impressed investors with solid fourth-quarter earnings. Valuations in the sector remain close to their historical lows, both in absolute and relative terms. With fears of a recession lingering in the markets, financial stocks fell massively in the year-end sell-off, creating attractive buying opportunities for long-term investors.

Financial stocks tend to benefit the most, relative to other sectors, when yields are rising. Although the major central banks are currently taking a wait-and-see stance, we expect that the US Federal Reserve will increase interest rates further in the second half of 2019. This should push yields higher, thus confirming the current favorable environment for financial stocks.

As an investor you might want to stay invested in equities, at the same time you are seeking some level of protection for your portfolio. The JB Multi Bonus Certificate on Financial Stocks may be an interesting investment idea:

Highlights

• Minimum return of the Bonus Level, 113.60% (CHF), 113.50% (EUR), 120.50% (USD), during sideways markets if KI Barrier never touched
• 100% participation in the respective basket performance
• Safety buffer until the KI Barrier (observation at maturity)