Despite the continued low-interest-rate environment and increasing concerns over the pace of global economic recovery, the financial services industry is witnessing decent demand thanks to increasing financial transactions and capital market activities. This, coupled with the Fed’s openness to raising interest rates sooner than expected, should boost the industry’s growth. So, Wall Street analysts expect 360 DigiTech (QFIN) and Patria Investments (PAX) to continue to rally in the near term. Let’s discuss.Even though the prolonged low-interest rate environment and rising uncertainties regarding the pace of global economic recovery are unfavorable for financial services companies, increasing financial transactions and capital market activities have been helping the industry attract increased investor attention lately. This is evidenced by the Financial Select Sector SPDR ETF’s (XLF) 5% gains over the past month compared to the SPDR S&P 500 Trust ETF’s (SPY) 1.8% returns.
Furthermore, the Federal Reserve could raise interest rates as soon as early 2023 and recently indicated its willingness to reduce asset purchases before the end of the year, moves that should be a boon for the financial services industry. Moreover, the industry is expected to benefit from the continued integration of advanced technologies. According to a Globe Newswire report, the global financial services market is expected to grow at a 9.9% CAGR to hit $22.5 trillion this year.
Given the financial services industry’s promising prospects, Wall Street analysts are highly optimistic about the upside potential of 360 DigiTech, Inc. (QFIN) and Patria Investments Limited (PAX). So, we think it could be worth adding these names to one’s watch list now.