Global finance Essay Example | Topics and Well Written Essays - 500 words

Global finance - Essay Example The stock price of Lloyds Banking Group (UK: LLOY) has dropped by as much as ?10 per share over the past 2 months. Ignoring the minor increase in the stock price during the first week of July, this decline has been gradual over this period. The share price has dropped consistently during recent months due to a number of reasons that will be elaborated below. These trends also fall in line with some of the observations made during the beginning of the sample period based on macroeconomic trends in the UK and Europe in general (Desai, 2011). Based on information on other players in the banking sector, Adams (2011) says that most banks have been performing below their book values due to the longstanding negative sentiment in the financial markets over the stability of these banks. At a time when the world is just starting to recover from the 2008 global financial crisis, investors are reluctant to place their money on this sector, especially in favor of the bigger banks (Brown, 2010). T hus, a major factor inhibiting the growth of the share price is the current sentiment over liquidity concerns and debt quality within banks. Thus, the current stock scenario reflects the short term outlook of the investors.