European Equity Strategy "Investors entertaining rotation" Fowler

Research evidence excerpt

European Equity Strategy "Investors entertaining rotation" Fowler

Global Research

22 June 2026ab

European Equity Strategy Equity Strategy

Europe including UKInvestors entertaining rotation

Gerry Fowler

Strategist

What we were saying gerry.fowler@ubs.com

+44-20-7567 5490

We have seen scores of clients in Europe and the US in recent weeks, with our latest

views covering key themes globally as well as the detail of the opportunities (and lack of) Sutanya Chedda

Strategistin Europe. For detail on our thoughts, please see these notes:

sutanya.chedda@ubs.com

The Theme-ometer: What to buy if not AI +44-20-7567 8155

Here we go again: Consider hedging with exuberance percolating

At this rate: How to trade higher yields

Simply Europe: Insufficiently exciting

Simply UK: Not Quite the Full English

Simply SMID (EU): The discount wears Prada

Autos: Still struggling for traction

Positioning heavily skewed to AI – but we note some nervousness

Across all client segments in the US, positioning remains heavily concentrated in the AI

capex complex: US tech, semiconductors, power, capital goods (including a select few

European stocks). However, what has shifted meaningfully is confidence. Investors

increasingly recognise the crowding and 'same bus' dynamic, and many are beginning

to question how much upside remains versus risk. In effect, we think the market still

believes in the AI story structurally; but tactically, conviction is eroding at the margin, and

some hedge fund investors have begun trimming exposure. We note the risk that capex

upgrades abate as activity reaches a ‘speed-limit’, leaving a lack of revisions in the supply

chain and expensive, crowded positions vulnerable to underperformance..

Hedge funds are rotating first - the search for the 'next trade' has begun