Today‘s Morning Meeting

Research evidence excerpt

Today‘s Morning Meeting

is performing

better again. Risks remain, see last weekend’s renewed escalation, but if pricing out of the conflict’s impact resumes, and if

there is internals broadening in 2H, Europe could be looking interesting again. We find that global investors don’t have much

risk in Europe. In terms of positioning, we keep positive call on Semis, Industrials and Mining. Banks should also trade well, as

they are leveraged to PMIs and to credit growth. If Eurozone PMIs rebound, as we expect in 2H, then Defensives should

generally not be favoured, and Energy would have further downside if oil price moves lower. There is no valuation cushion

between Energy stocks and Brent. We remain cautious on Business Services, Software and Media. Also, we are still not

excited about Defense, having argued since last September to reduce it, post a strong past run.

Global Banks (Kian Abouhossein)

Mythos-class era: Cybersecurity a bigger concern than credit risk

Cybersecurity in Banks is currently one of the biggest undiscounted risks not reflected in Bank valuations in our view, partly due

to the limited disclosure available which leads to a lack of comparability between banks on their preparedness or lack thereof to

deal with emerging cybersecurity risk (pre-event and post-event processes), driven by advanced AI capabilities such as

Frontier Models. While there is significant regulatory focus on capital ratios, we believe looking at cybersecurity risk through the

lens of the capital framework is not the best approach. In our view, there should be an increased focus on cybersecurity driven

liquidity risk and this should be tested through increased infrastructure resilience testing and through a deposit-run