No gold for MDAX

In the US, investors are currently rotating their equity portfolios out of technology Mega-tech and into small-cap stocks. Notably, the Russell 2000 has outperformed the Nasdaq by 13% in July so far. However, this growing appetite for small caps has not reached Europe. In Germany, for instance, large-cap stocks are still outperforming the MDAX, which is more representative of the German Mittelstand. One reason for this trend could be that larger, more global companies are less affected by the current economic challenges in Germany compared to smaller companies. Nonetheless, at ECP, we continue to emphasize the undervaluation of smaller companies relative to the broader European market, which is already considered inexpensive by international standards.