Markets
Banks Hit With Record Fines for Forex Manipulation [Chart]
![Banks Hit With Record Fines for Forex Manipulation [Chart]](https://www.visualcapitalist.com/wp-content/uploads/2015/05/banks-record-fines-forex-manipulation.jpg)
Banks Hit With Record Fines for Forex Manipulation [Chart]
The Chart of the Week is a weekly feature in Visual Capitalist on Fridays.
Few things in life are guaranteed. There’s death and taxes of course, but is anything else inevitable?
We’d say the cat and mouse game between regulators and financial institutions ranks up there. The rodents are usually pretty elusive, but this week the cat had them cornered and made off with their lunch.
On Wednesday, six major banks got more than just their wrists slapped by various authorities including The Fed, the Department of Justice, the Commodity Futures Trading Commission, the New York State Department of Financial Services, and the U.K. Financial Conduct Authority.
The total fines add up to nearly $6 billion for the manipulation of foreign currency rates for the benefit of traders. The biggest hit this week was to Barclays, with the bank getting a $2.5 billion fine in the probe. Barclays, along with three other banks (Citi, JPMorgan, and RBS) had pleaded guilty to criminal charges for forex manipulation with the market prices for US dollars and euros. UBS, the bank that was granted immunity in the antitrust case, did also plead guilty to manipulating LIBOR.
The guilty pleads are no surprise, as the details of these collusion allegations are pretty damning. Evidence of trader conversations in chatrooms have been leaked by authorities and there are pages upon pages of them.
Some of the classics (from above sources):
- “If you aint cheating, you aint trying.”
- “its just amazing how libor fixing can make you that much money”
- “give the rate that was most advantageous to the bank, but would not make the customer go away!”
- “JUST BE CAREFUL DUDE.” “I agree we shouldn’t ve been talking about putting fixings for our positions on public chat.”
Yes, you probably shouldn’t be talking about putting fixings on positions in public chat. Enjoy your new job (probably working for some government agency “teaching” them how forex manipulation works).
Markets
The European Stock Market: Attractive Valuations Offer Opportunities
On average, the European stock market has valuations that are nearly 50% lower than U.S. valuations. But how can you access the market?
European Stock Market: Attractive Valuations Offer Opportunities
Europe is known for some established brands, from L’Oréal to Louis Vuitton. However, the European stock market offers additional opportunities that may be lesser known.
The above infographic, sponsored by STOXX, outlines why investors may want to consider European stocks.
Attractive Valuations
Compared to most North American and Asian markets, European stocks offer lower or comparable valuations.
| Index | Price-to-Earnings Ratio | Price-to-Book Ratio |
|---|---|---|
| EURO STOXX 50 | 14.9 | 2.2 |
| STOXX Europe 600 | 14.4 | 2 |
| U.S. | 25.9 | 4.7 |
| Canada | 16.1 | 1.8 |
| Japan | 15.4 | 1.6 |
| Asia Pacific ex. China | 17.1 | 1.8 |
Data as of February 29, 2024. See graphic for full index names. Ratios based on trailing 12 month financials. The price to earnings ratio excludes companies with negative earnings.
On average, European valuations are nearly 50% lower than U.S. valuations, potentially offering an affordable entry point for investors.
Research also shows that lower price ratios have historically led to higher long-term returns.
Market Movements Not Closely Connected
Over the last decade, the European stock market had low-to-moderate correlation with North American and Asian equities.
The below chart shows correlations from February 2014 to February 2024. A value closer to zero indicates low correlation, while a value of one would indicate that two regions are moving in perfect unison.
| EURO STOXX 50 | STOXX EUROPE 600 | U.S. | Canada | Japan | Asia Pacific ex. China |
|
|---|---|---|---|---|---|---|
| EURO STOXX 50 | 1.00 | 0.97 | 0.55 | 0.67 | 0.24 | 0.43 |
| STOXX EUROPE 600 | 1.00 | 0.56 | 0.71 | 0.28 | 0.48 | |
| U.S. | 1.00 | 0.73 | 0.12 | 0.25 | ||
| Canada | 1.00 | 0.22 | 0.40 | |||
| Japan | 1.00 | 0.88 | ||||
| Asia Pacific ex. China | 1.00 |
Data is based on daily USD returns.
European equities had relatively independent market movements from North American and Asian markets. One contributing factor could be the differing sector weights in each market. For instance, technology makes up a quarter of the U.S. market, but health care and industrials dominate the broader European market.
Ultimately, European equities can enhance portfolio diversification and have the potential to mitigate risk for investors.
Tracking the Market
For investors interested in European equities, STOXX offers a variety of flagship indices:
| Index | Description | Market Cap |
|---|---|---|
| STOXX Europe 600 | Pan-regional, broad market | €10.5T |
| STOXX Developed Europe | Pan-regional, broad-market | €9.9T |
| STOXX Europe 600 ESG-X | Pan-regional, broad market, sustainability focus | €9.7T |
| STOXX Europe 50 | Pan-regional, blue-chip | €5.1T |
| EURO STOXX 50 | Eurozone, blue-chip | €3.5T |
Data is as of February 29, 2024. Market cap is free float, which represents the shares that are readily available for public trading on stock exchanges.
The EURO STOXX 50 tracks the Eurozone’s biggest and most traded companies. It also underlies one of the world’s largest ranges of ETFs and mutual funds. As of November 2023, there were €27.3 billion in ETFs and €23.5B in mutual fund assets under management tracking the index.
“For the past 25 years, the EURO STOXX 50 has served as an accurate, reliable and tradable representation of the Eurozone equity market.”
— Axel Lomholt, General Manager at STOXX
Partnering with STOXX to Track the European Stock Market
Are you interested in European equities? STOXX can be a valuable partner:
- Comprehensive, liquid and investable ecosystem
- European heritage, global reach
- Highly sophisticated customization capabilities
- Open architecture approach to using data
- Close partnerships with clients
- Part of ISS STOXX and Deutsche Börse Group
With a full suite of indices, STOXX can help you benchmark against the European stock market.
Learn how STOXX’s European indices offer liquid and effective market access.
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