Live Markets: German stimulus momentum still under‑priced, UBS says

Heidelberg Materials AG

25/02/2026 10:42

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GERMAN STIMULUS MOMENTUM STILL UNDER‑PRICED, UBS SAYS

There is still plenty of scope left to buy into Germany’s fiscal acceleration, even as early indicators show momentum building across defence, transport and infrastructure, UBS strategists said on Wednesday.

Evidence of the long‑flagged spending push — from weapons and ammunition to roads, rail and construction — is now showing up in macro data, with IFO and PMI surveys already hinting at a broadening recovery.

Many of the companies most exposed to this stimulus are seeing order books swell, and among several examples, UBS flags brake-maker Knorr-Bremse KBX.DE, copper producer Aurubis NAFG.DE and industrial firm Thyssenkrupp. TKAG.DE

Despite this, UBS argues this part of the market still isn’t crowded. Its German fiscal beneficiaries basket has climbed to become the third‑strongest in Europe but valuations remain around market multiples and well below those of pricier, more hyped themes like renewables or AI‑enablers.

Positioning is also light, with crowding scores mostly within normal ranges, the bank said.

Consensus expects around 25% earnings growth for 2026 — and many names are already seeing upgrades — but UBS sees scope for the rally to extend as estimates shift higher still and the market prices in multi‑year policy‑anchored demand.

As they put it: “Investors should be buying into the momentum that is not yet reflected in valuations or positioning to a worrying extent yet.”

Preferred names include rail, trucking and engineering stocks such as Kion KGX.DE , Knorr‑Bremse and SPIESPIE.PA , where UBS sees potential returns above 20% as fiscal tailwinds meet operating leverage. The bank expects its basket of beneficiaries to rise at least another 15% this year.

(Alun John)

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