Cheap Foreign Bank ADR Stocks

Foreign bank stocks have fallen heavily in the past few months in tandem with their US peers due to the credit crisis. Last week was a crazy week as many of the bank stocks skyrocketed due to the short covering rally. Many are not sure what will happen after the ban on shorting of financials ends on Oct 2nd.

Some of the bank stocks that were heavily shorted before went high due to the rally. Still there are some foreign banks that are still down > 50% year-to-date. Its possible that these banks may be cheap now if the bailout plan for the US market works. On the other hand one must remember that these bad beaten down stocks are cheap for a reason. They have had huge losses or the economy where they operate is in a downturn.

In the list below, the worst ADR YTD is Allied Irish Bank (AIB) which is down over 60%. This is not surprising since the Irish economy has been hurting badly in the past couple of years. For the same reason the other Irish ADR, IRE is also down over 54%.

The best bank ADR so far this year is the London-based HSBC bank(HBC). It is down just 2.34% YTD. Compared to other British banks like LYG and RBS which are over 40% and 50% down YTD, HBC’s performance is very good.

The following table lists the worst and the best bank ADRs year-to-date:


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