Market Snapshot: Go for the ‘world’s biggest contrarian trade’ and buy European banks now, Citi says

You’ve probably heard that European banks aren’t doing so well, from Italy’s long-suffering lenders to Deutsche Bank with its potential $14 billion penalty.

But there is so much gloom around the sector that European banks now look good to Citi’s stock strategists.

These banks have gone “from value trap to value trade,” and it’s time to buy them, said Citi’s Jonathan Stubbs, Ayush Tambi and Nikhil Jadhav in a note dated Wednesday.

The strategists have given a range of reasons for their bullishness in their 15-page missive, starting with the fact that contrarians ought to like banks in the European Monetary Union, meaning countries that use the euro.

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