UBS has raised its price targets for the banks by 25% “driven primarily by lower cost of equity assumptions reflecting the decline in market-implied equity risk premiums (ERPs) in recent months”.
Analysts and market watchers are struggling to explain the local banks’ rally over July 6-10, and their continued rally this week. A report by UBS, dated July 13, attempts to explain why the banks are behaving as they are.
“We struggle to identify a near-term catalyst for a correction, but equally struggle to argue for further material multiple expansion,” say UBS banking analysts Akash Rawat and Benjamin Tan.
