Bank of America Corp. (NYSE:BAC) seems to have caused a serious impact on China’s stocks as they slipped down the most in about a month after the bank downsized its growth projections for the country. BAC followed Deutsche Bank and Barclays in cutting its forecasts for China.
Chinese analyst Xu Shengjiun said that investors have little confidence in the market and it will probably continue slipping further down, with BAC shrinking its growth forecast by 0.3% and its quarterly growth estimates by 0.6%
Swiss private bankers Julius Baer Group announced today that they intend to acquire Bank of America’s wealth management unit operating outside of the USA and Japan. Julius Baer is set to pay up about $860 million for the acquisition and underlines its focus on growth markets. To an extent, the move can be seen as BAC complying with U.S. regulator prescriptions for emergency plans that aim to ensure the biggest players do not fail.
Bank of America has been holding up decently lately, with share price finding support at about $7.50 and managing to avoid 2011 year-end lows. The company recorded a net income of $2.46 billion in the second quarter and total consolidated revenue of nearly $22 billion for the same period, yet their latest 10-Q speaks of a generally unfavorable business environment that is shrinking across the board compared against the previous two quarters.
Wall Street seems to have faith in the Bank of America, with estimates that are not eye-popping but are still positive. Investors may look forward to more serious action around BAC when the stock reacts to the news for the Julius Baer acquisition.
