European Equity Strategy

Investors are beginning to question the sustainability of heavily crowded AI-linked positions, prompting a search for broader market rotation into cyclicals and financials. European equities remain selectively appealing, primarily centered on banks and potential recovery in luxury.

Key Takeaways

• 1.Investor positioning is heavily skewed toward AI/tech, but conviction is wavering as hedge funds begin to rotate.
• 2.Appetite for European equities remains limited among US investors, with interest concentrated in AI-exposed sectors and banks.
• 3.Banks are a area of consensus for European and global investors due to solid profitability and capital returns.

Table of Contents

• What we were saying
• Positioning heavily skewed to AI – but we note some nervousness
• Hedge funds are rotating first - the search for the 'next trade' has begun
• Europe presents, at least, a tactical question
• A tale of two Europes: defensive laggards vs cyclical optimists
• FROM CONSENSUS CROWDING TO THE SEARCH FOR BREADTH
• Valuation Method and Risk Statement
• Required Disclosures
• Analyst Certification:
• UBS Global Research: Global Equity Rating Definitions
• UBS Global Research Disclaimer

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