According to the information from Zhijun Finance APP, HSBC analysts stated that the stocks of Goldman Sachs (GS.US) and Morgan Stanley (MS.US) have shown a 'lack of attractive risk-return' after the recent rise in banking stocks. They also added that investors should beware of the belief that the 'super cycle' in investment banking will drive significant stock price increases.

Analysts led by Saul Martinez stated that although expenses in the investment banking business may increase, their estimates for Goldman Sachs and Morgan Stanley have already taken into account a factor of around 30% increase on top of the 2024 basis. The analyst stated: 'We believe market expectations are far higher than reality, leaving disappointing room,' and he downgraded the stock ratings of Goldman Sachs and Morgan Stanley from 'outperform the large cap' to 'hold'.

With Trump's victory in the U.S. presidential election, investors expect his policies - including tax cuts and regulatory easing - to boost economic growth and uplift bank stocks. Since the KBW Nasdaq Bank Index surged nearly 10% on November 6, Morgan Stanley and Goldman Sachs have risen by 13% and 14% respectively.

Despite the downgrade in stock ratings for Goldman Sachs and Morgan Stanley, Saul Martinez stated that he is now more optimistic about the fundamental outlook for these two banks than before. He also raised the earnings per share expectations for these two banks, citing higher investment banking, assets and wealth management fees, as well as 'increased buybacks'.

Although some analysts are optimistic, including Wells Fargo analyst Mike Mayo, who referred to this catalyst as a 'watershed moment' and believes that there could be a 'super cycle' in the capital markets. However, Saul Martinez is not the only one hesitant. Recently, Oppenheimer analysts downgraded JPMorgan's rating from 'outperform the large cap' to 'neutral with the large cap' after the market rally and warned that JPMorgan will lower its net interest income.