Investment weekly

Investment Weekly 14 August 202 6 For Professional Clients only. Marketing Communication.

Chart of the week – Broadening out continues Global EPS growth (IBES consensus forecast), % 80 80%+

Nasdaq Nasdaq USA Japan India EM Asia ex ACWI DM UK Europe China Brazil 2024 Japan ex UK

While the US continues to lead global consensus profits growth , an important story this year has been the broadening out of profit s and market performance , initially into emerging m arkets and more recently into parts of Europe. US Rates → Much of the broadening has been tied to the AI boom . Market focus has moved beyond the hyperscalers into semiconductors and sectors such as industrials, utilities, and materials . In emerging market s, Taiwan and South What the latest inflation data Korea have been key beneficiaries of this build -out (although Korea has seen recent volatility, see page 2) . mean for the rates outlook In Europe, stocks have managed to keep pace with the US this year despite the region’s subdued GDP growth and a stock market that lacks deep exposure to AI. In part, that’s down to the fact that European earnings are now accelerating after two years of zero growth . In fact, they’re shaping up to be among the strongest in years , w ith 2026 year -on-year earnings growth at around 18% for MSCI Europe . Revisions are at a five -year high, with upgrades spread across most sectors , and strong profits in energy, financials, and industrials. W ith starting expectations and valuations lower , improving profit s potentially reinforce Europe as an “anti -bubble” Asia Stocks → market where a pick -up in previously ignored sectors can give investors a reason to look beyond expensive US growth . Q2 profits and recent Overall, the global opportunity set may be widening. While AI remains a key market driver, firmer earnings performance in Asia momentum in Europe and continued strength in parts of emerging markets is further evidence of broadening out – supporting the case for wider regional exposure in portfolios heading into 202 7. #broadeningout #europe #AI

Market Spotlight In g ood health Healthcare stocks have quietly been writing a comeback story. After a tough start to 2026, the sector has performed Emerging Markets → well during the summer, with its defensive earnings appealing to investors looking for alternatives to episodic volatility in crowded tech/AI trades. That shift has been helped by fading US policy worries around drug pricing and How extreme weather could tariffs, plus upbeat mid -year conference sentiment , and strong product development pipeline s. impact EM assets With Washington -driven risks now looking more manageable, earnings visibility is improving and bearish sentiment towards the sector has started to unwind. One underappreciated tailwind is the re -acceleration in pharma dealmaking: around USD60bn has already been deployed in acquisitions year -to-date, which can provide a valuation floor and should provide support to small - and mid -cap biotech stocks via takeovers and partnerships. Overall, v aluations look more compelling after a de -rating ( with a forward P/E for the sector of around 17x in the Read our latest vi ews: US), and revisions are improving. And while a pullback wouldn’t be surprising after the early summer surge, Investment Monthly : any dip could be an attractive entry point into the second half of 2026 , with healthcare offering both portfolio August 2026 diversification ( helped by its defensive qualities ) and a hedge if tech leadership disappoints . #healthcare #stocks

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