A few days back, we mentioned about the possibility of Deutsche Bank causing havoc in financial markets all over the world after it was slapped with a $14 billion fine by the US Justice Department for misselling of mortgage-backed securities. On top of the speculation that the US Fed was to do another round of interest rate hike, this Deutsche issue has been one of the main reasons why sentiment on markets all over the world is weak.

So what’s the big deal about Deutsche? The biggest source of worry isn’t about Deutsche’s financial statements but rather (among others) Europe’s ability to absorb such a hit and the domino effect since Deutsche has operations and partners in other major financial districts. Europe still hasn’t fully recovered after Greece and the last thing it needs is another financial concern. Deutsche can be a knockout punch. On the other hand, imagine the disruption that Deutsche will cause its operations and partners all over the world.

The fine adds up to the financial woes that Deutsche is already facing such as a role in the manipulation of a financial benchmark, claims of trades that violated Russian sanctions and generalized sense of confusion over its mission.

Deutsche stock prices rallied by more than +6% last Friday after it reported that it is close to settling the fine. Analysts were saying that the fine might be reduced to somewhere around $6 billion.

However, on a technical perspective, this could just be a mere dead cat bounce since according to sources, Deutsche can’t pay the fine if it’s above $4 billion. The next few days or this entire week could be interesting.

how to invest in the stock market

Continue to expect the PSE index to move just within the 7,500 to 7,800 range. Concerns about Deutsche will provide a drag to markets all over the world.

A bad market (weak sentiment) opens up good buy opportunities. One of the 30 index stocks that is worth looking at right now is URC.

how to invest in the stock market

URC is inching closer towards its support between P170 to P177. Buy in tranche between this range to make average cost low. Cut losses below P170.

Article by Makoy Velasco, Certified Securities Representative
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