JP Morgan: Investment banking's upward trend after the US election is expected to continue.

In a recent report, analysts from J.P. Morgan stated that the strong performance of investment bank stocks in the United States following the election was reasonable, considering the potential for tax cuts, the expected delay and further dilution of the final Basel III regulations, as well as the outlook for investment banking activities, especially mergers and acquisitions. Analyst Kian Abouhossein led the report, stating: "We believe this momentum will continue in the short term, supported by the strong stock market and credit trading environment in the fourth quarter so far." Overall, the company maintains a "hold" position on the investment banking industry. However, despite the final version of Basel III possibly being delayed and not as strict as previously proposed, potential regulatory easing compared to current rules will take time to implement. They do not expect any changes until the first or second half of 2025. Goldman Sachs Group, Inc. (GS.US) and Morgan Stanley (MS.US) have already factored in the upside potential related to this in their pricing, so analysts from J.P. Morgan believe that European banks have more upside potential. Abouhossein wrote, "Long-term, we favor European investment banks, which will also benefit from any potential improvement in client activity levels." Since November 5, Goldman Sachs Group, Inc. has had a P/E ratio of 12.7 times, Morgan Stanley's P/E ratio is 15.6 times, compared to European investment banks such as Deutsche Bank Aktiengesellschaft (DB.US) at 5.3 times, Barclays PLC Sponsored ADR (BCS.US) at 6 times, and even UBS Group AG (UBS.US) at 10.7 times, they are significantly discounted. It is worth noting that since November 5, the stock prices of Goldman Sachs Group, Inc. and Morgan Stanley have risen by about 12%, outperforming the S&P 500 index's 2.9% increase. In contrast, Deutsche Bank Aktiengesellschaft has declined by 3.7%, UBS Group AG has fallen by 0.2%, and Barclays has seen a slight increase of 0.8% during the same period. Barclays PLC Sponsored ADR generates 31% of the group's revenue from the United States. Deutsche Bank Aktiengesellschaft generates 33% of its investment banking revenue and 17% of its group revenue from the United States. J.P. Morgan's long-term global investment banking ranking order is: Deutsche Bank Aktiengesellschaft, UBS Group AG, Barclays, Goldman Sachs Group, Inc., Industrial Bank of France, J.P. Morgan and BNP Paribas France, Abouhossein and colleagues said. "In Europe, we have shifted our portfolio towards investment banks with higher non-interest income leverage, namely UBS Group AG, Deutsche Bank Aktiengesellschaft, and Barclays."