UBS’s Stock Jumps with the Rest of Europe

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Investor confidence in UBS (NYSE:UBS) has improved since the bank announced early last week that it will be able to report a profit for Q3 2011 despite the $2.3 billion loss to it from a series of unauthorized trades. The largest Swiss bank had suggested that it might report a loss this quarter when the rogue trading incident was discovered in mid-September – sending its stock price plummeting and leading to the ouster of its CEO. While UBS’s stock price fluctuated considerably last week in reaction to news concerning the ailing European economies, we expect the stock to rally this week as European leaders are closer to a plan for recapitalizing banks in the Euro-zone.

See our full analysis of UBS

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UBS Jumps with Rest of Europe

The Swiss bank’s share price slumped when the trading loss was discovered in mid-September, and the stock continued to take a beating with the company CEO quitting as an after-effect of the debacle. The announcement swiftly lifted the stock price (See UBS to Report Q3 Profit Despite Trading Scandal).

Also, reports that Swiss officials met to discuss the impact of the spreading European crisis on Swiss banks and concluded that UBS and its largest competitor Credit Suisse (NYSE:CS) are well capitalized and would continue to strengthen their core capital structure also helped alleviate investor fears. [1]

As Greece continues to receive support from other European countries and the ECB, we expect UBS’s stock price to continue to react heavily to news related to the Euro-zone, with the positive chain of events suggesting an rise in the stock this week.

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Notes:
  1. Swiss officials convene bank crisis committee: report, Reuters, Oct 9 2011 []