HSBC raises its target for the Stoxx 600 at the end of 2026 to 680 from 670, corresponding to 7 percent upside from the current level. This is stated in an analysis from the bank.
For the end of 2027, the target is set at 760, corresponding to approximately 20 percent upside.
The bank also sees potential in UK mid-cap companies. The FTSE 250 is currently trading at a 25 percent discount to its ten-year average, measured as price-to-book value (P/B). According to HSBC, further catch-up is possible as earnings leadership shifts towards mid-cap companies in 2027, when earnings per share growth is expected to reach 14 percent compared with 5 percent for the FTSE 100.
“Higher domestic exposure could also provide additional tailwinds as the growth outlook in the UK becomes more favourable”, the bank adds.
HSBC prefers the financials, industrials, IT and utilities sectors, as well as the markets of Germany, the Netherlands, Spain and Italy. Italy is raised to overweight, while France is lowered to underweight. The bank cites, among other things, stronger Italian GDP prospects and improved earnings momentum, while France is weighed down by weaker macroeconomic forecasts and deteriorating earnings expectations.
