Market Musings 301125: Ideas for H1 2026

Snapshot weekly report:
Small and Midcaps stage a comeback (click on title to read)


Ideas for H1 2026

Top ideas for H1 2026: what has already worked well that can continue to work well

  1. Europe mid-/small-caps:
    a) relatively cheap versus history, and versus Europe large-caps
    b) has historically outperformed European large-caps by a wide margin 2000-21: but large-caps have outperformed since 2022;
    c) Lower euro interest rates, modest rebound on domestic economic growth and lower exposure to the euro exchange rate are all
    positive factors for small-caps;
    d) Potential to see higher growth and better improvement in profit margins; greater exposure to services which should benefit from
    Improving consumer sentiment.
    Suggested implementations: EMID, CES1 ETFs

  2. Euro Banks:
    a) still relatively attractively valued despite impressive performance over 2025 (+75%);
    b) offering generous dividend yield > 5% and returning cash to shareholders via share buybacks;
    c) Growing loan demand both from households and companies driving earnings growth;
    d) Potential to benefit from further movement towards an EU capital markets union;
    Suggested implementations: BNKE ETF

  3. Copper Miners:
    a) underlying copper price (LME) breaking out to new all-time high c. $11,000/ton on strong underlying demand from tech, AI/data centres, electrification including EVs; higher copper prices forecast for 2026
    b) Restricted growth in global supply promises higher profit margins for global copper producers;
    c) Further growth in copper demand from data centre installations and upgrades to electricity infrastructure in view;
    d) copper miner index breaking out to new all-time high above previous 2011 high;
    e) little prospect of new copper mines coming online in near-term - average 17 year lead time from copper discovery to mine production
    Suggested implementations: COPX/COPG ETF

  4. Latin America/Brazil:
    a) Deep value emerging market with low P/E, high dividend yield;
    b) Brazilian economy to benefit from political change, lower interest rates;
    c) reflected in stronger Brazilian real currency v USD;Brazilian stocks tend to outperform when USD weakens;
    d) BOVESPA index recently broke out to a new all-time high
    Suggested implementations: IBZL, ALAG ETFs, BRLA investment trust

  5. Eastern Europe/Poland:
    a) Cheap stock market with high dividend yield;
    b) buoyant economic growth (3%+) combined with 3% inflation, driving earnings growth;
    c) Low US export dependence, so little affected by tariffs:
    d) hardworking people - only country in Europe where average…

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