LIVE MARKETS-Austria, Greece, and Norway look promising if midcap downturn reverses - UBS

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AUSTRIA, GREECE AND NORWAY LOOK PROMISING IF MIDCAP DOWNTURN REVERSES - UBS

European small and mid caps have been caught in "one of the longest relative drawdowns in history" says UBS, lasting three years.

But as the global equity landscape shifts, they think 2025 could be an inflection point.

"The post pandemic market regime, characterised by large-cap dominance, liquidity concentration, and a premium on perceived safety, is being disrupted."

Inflation is moderating, central banks are pivoting, and tariffs are re-emerging as a dominant policy tool - all leading to a potentially positive moment for small and mid caps.

In terms of markets in Europe, UBS flag Austria, Greece, and Norway as best for capturing opportunities in small and mid caps, based on a model which takes into account valuation, sentiment, earnings and PMI metrics, while traditional defensives such as Switzerland and Finland lag

SMIDs are now trading at some of the widest valuation discounts to large caps in decades, the UBS strats say, and have been underpeforming further in 2025. A basket of European small and mid cap names .SWUSMSP is down 14% this year so far, underperforming the STOXX 600 which is down 4%.

(Lucy Raitano)

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