The Point for Europe

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The Point for Europe

Point |

Monday, 20 July 2026

Top Call | Company | Industry | Strategy & Economics | Fixed Income & FX | Key Rating and Target Price

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EM Equity Strategy Compass - 2H26 Outlook: The Broadening Question Global Economic Outlook & Strategy -

Despite recent volatility, the MSCI EM is still up c20% YTD, though gains have The Resilient Global Economy—

come from a narrow set of countries/sectors. As in a global context, client Cascading Supply Shocks

conversations are returning to the likelihood of “broadening” performance in

2H26. The success of broadening depends on: (1) cyclical improvement in macro

data and EPS revisions, and (2) a sustained pause in Tech outperformance. On

cyclical recovery, economic data remains supportive, though EPS revisions are

mixed and narrow. On Tech, implied volatility is elevated and AI sentiment has

waned, but the sector continues to be supported by standout earnings growth,

strong momentum, and attractive valuations. If the macro environment remains

favorable, including easing geopolitical risks, there is scope for broadening. We

therefore upgrade China to Overweight. At the same time, we tactically reduce

exposure to the AI theme, neutralizing Korea (O/W since mid-25) while

maintaining an Overweight stance on Taiwan.

David Groman | Nikhil N Jadhav, CFA | Beata M Manthey, Ph.D. | Pierre Lau, CFA | Surendra Goyal, CFA

European Banks - Banking On Markets – Summer 2026: Blow Out Equities

Revenues

2Q26 saw a blow-out quarter for Equities & ECM, especially in US and Asia helped

by some high profile IPOs, as well as record prime balances. We do not expect

quarterly revenues to prove sustainable at these record levels, but the backdrop is

likely to remain supportive throughout 2H26 and into 2027.