Bank stocks often act as proxies for political risk, as well as economic barometers. When a government starts shaking or a recession looms, financial shares may be the first to suffer. If you trust bank analysts, that paradigm is about to change.
Financial institutions in countries with high political risk have seen some of the steepest positive earnings revisions so far this year. In Egypt, for example, the median bank is now expected to make 20.7 percent more in the next 12 months than was the case when 2017 started. In Brazil, with the second-steepest increase in optimism, the median earnings-per-share forecast is up 12.4 percent.