09. March 2021 | 10:56 CET
Square, Marble Financial, Commerzbank - Now the banking and finance stocks are going
When bull market movements persist and tech and hype topics have all run back and forth, one likes to remember an often neglected stock market segment: banking and financial stocks. These stocks are mostly called late cyclicals because, in a typical upswing scenario, the banks' original growth financing takes place first under high risks. Only when the economy does well again does the transaction volume increase on both the credit and asset sides. Of course, companies that participate in payment transactions always exist. Let's see which financial stocks are currently convincing.
time to read: 4 minutes by André Will-Laudien
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Square - Music streaming and payment services under one roof
Rapper Jay-Z's music streaming service Tidal is getting a new owner. Twitter CEO Jack Dorsey's mobile payments Company Square is taking a majority stake for USD 297 million. According to the payment service, Jay-Z is expected to join Square's board of directors as part of the deal. Dorsey had founded Square during a hiatus at Twitter and now heads both companies. He raised the obvious question of how a streaming service and a financial services company fit together in a series of tweets. He also answered himself: It's about new ways for musicians to make money from their work, he said.
Indeed, Square has created new opportunities for small merchants with its smartphone and tablet checkout system "CASH" - and the experience could also be useful in the music industry. As Jack Dorsey has since announced via Twitter, he wants to expand the ecosystem with this investment. What happens for merchants and customers in the payment service provider segment should also become possible for artists in the future. Tidal, though, is not considered incredibly successful or innovative as far as the streaming market is concerned. It could become a cash burner for Square.
The Square share initially went on a dive with the news and fell back to EUR 160. Yesterday it cost EUR 182 again - the high from February was EUR 232. Even with Tidal, the stock remains one of the hottest high-tech stocks on the Nasdaq. There is still a lot of innovation coming to light here that investors have not yet thought about.
Marble Financial - The financial platform for private households
Interest rates have been rising more sharply in the US of late. In times like these, that also means that the creditworthiness of borrowers is back in the spotlight. Banks are becoming more restrictive in their lending and people with more complicated financial circumstances are gaining less access to credit. Debt trends in the US can mostly be extrapolated to neighboring Canada. According to Stats Can, Canada's national statistics office, household debt as a share of disposable income rose to 171% by the end of 2020.
The trend toward ever greater household debt has led to a significant increase among Canadian debtors, who are permanently underfunded and must first slowly rebuild their financial status. The so-called scorecard is deposited with banks and leads to a deterioration of future lending conditions if the debtor cannot improve his score by his own means. This fact has recently been exacerbated because of the expiring government aid programs in connection with Covid-19.
Marble Financial from Canada has dedicated itself to the segment of lower credit scores and is available to around 12 million Canadians with its service offering. With its 'MyMarble' platform, the Company offers an affordable and sustainable solution for Canadian customers to regain their "financial fitness" via data analysis of household circumstances. The system works with data algorithms and AI technology to provide the right guidance for necessary financial decisions, but most importantly, it brings personal goals into a suitable framework. Especially in these difficult times, Marble Financial offers a great opportunity to structure a struggling personal balance sheet.
Marble has been building its system since 2016, and thousands of consumers are already using it to put their financial future on a new footing. Marble Financial is only valued at around CAD 16 million, despite its high technological penetration, and banks and financial service providers are just getting ready to jump in. Be sure to take a closer look at this attractive small-cap.
Commerzbank - light at the end of the tunnel
Commerzbank seems to be coming off its lowest prices. Since 2008, the value had lost around 95%. The short-term view shows a good doubling from the 52-week low at EUR 2.81 to EUR 5.81 yesterday. For years, the Company attracted new customers with compensation checks. This strategy is now being discontinued because it does not need any expensive current account customers but wants to get to the wealthy clientele. Innovative ideas are required for this. Only recently, the very successful direct bank subsidiary Comdirect was reintegrated into the Group.
Commerzbank is an interest rate bet, but at the same time, it is also an increasingly transparent corporate story. If interest rates rise, the margin increases! On the cost side, in addition to the well-known cuts in the branch network in Germany, we also see an adjustment abroad, with 15 international locations being closed. None of these locations had so far made a significant profit or contributed positively to the Group's earnings. This measure is expected to reduce the essential fixed cost block by 10-12 percentage points, which means several 100 million EUR of additional income per year. The income statement will then also be much more relaxed.
In chart terms, a breakout above the EUR 6 mark could lead to a storm for the stock. The slightly rising interest rate level is an elixir for banks because margins in the lending business improve daily as a result. Keep the stock on the watchlist - in trend following and continue to add above EUR 6.00.