European Equity Strategy "Simply UK: The Gilt Trip" Chedda

研报英文原文证据摘录

European Equity Strategy "Simply UK: The Gilt Trip" Chedda

eful, less singular

Earnings still support the UK, but they are no longer carrying the whole argument. FY26 REVS

and FY27 EPS expectations have been revised up again, and FY26 EPS growth remains

Equities move based on:

above where it started the year, helped by Materials and the continuing contribution

from Energy and Mining. The issue is breadth and duration: 2027 expectations have Regime,

been dragged lower by Materials, and the earnings impulse remains concentrated rather

than broad enough to declare a clean expansion trade. That keeps the message close to Earnings,

last month, but with a slightly different balance: delivery still matters most, but earnings

now work with valuation rather than replacing the need for it. Valuations, and

Sentiment.

Valuations: The cushion has improved

Valuation is now the clearest support. UK equities still trade on a structural discount to Our REVS framework combines

Europe, even high quality UK stocks remain cheap versus peers, and SMIDs remain regime, earnings, valuation and

deeply discounted on book value. The improvement is important, but it is not self- sentiment to give a 2–6 month

executing. The post-Brexit risk premium, fragile demand structure, thin domestic tactical signal.

sponsorship and narrow breadth still justify part of the discount. Large caps look

adequately priced for growth versus the US and ACWI, while UK earnings growth Signals currently lean selectively

expectations still exceed the current multiple relative to Europe. The trade is therefore constructive, with regime still the

not “buy cheap UK”; it is buy valuation where there is earnings visibility, cash conversion drag, earnings supportive but less

and balance sheet discipline.