UBS Equity Preference List UK 2026 10 12

Report Completion Date 12 October 2026, 07:07 UTC Chief Investment Office GWM Investment Research

The United Kingdom EPL is a list of our highest conviction UK stocks selected across CIO’s sector and thematic preference lists (EPLs). Achille Monnet UBS Switzerland AG Overall view: We see attractive absolute returns for the UK market, supported by reasonable valuations and robust earnings growth. But we expect UK equities to lag other regions. Alexander Stiehler UBS Switzerland AG Latest Changes: We have added InterContinental Hotels Group to our portfolio.

Benchmark: MSCI United Kingdom Carsten Schlufter UBS Switzerland AG Most Preferred Company Changes* Currency Weight

Anglo American GBP 6.3% Diana Na UBS AG London Branch AstraZeneca GBP 6.3% BAE SYSTEMS GBP 6.3% Barclays GBP 6.3% Rudolf Leemann BP GBP 6.3% UBS Switzerland AG

Compass Group GBP 6.3% Computacenter plc GBP 6.3% Sacha Holderegger Experian Group GBP 6.3% UBS Switzerland AG Glencore Plc GBP 6.3% HSBC plc GBP 6.3% InterContinental Hotels Group Added GBP 6.3% Thomas Parmentier Consumers, UBS Switzerland Lloyds Banking Group GBP 6.3% AG Rolls-Royce GBP 6.3% SSE PLC GBP 6.3% Thomas Veraguth Standard Chartered plc GBP 6.3% UBS Switzerland AG

Source: UBS, Consider potential trading restrictions, all figures are rounded Please see important disclaimers and *Changes since the last publication disclosures at the end of this document.

Positioning and key trends We see a supportive backdrop for UK equities. Valuations are reasonable (12.4x forward P/E versus median since 1990 of 12.8x) and the earnings backdrop is improving, supported by strength in commodities and a broader manufacturing- and investment-driven economic improvement. Higher interest rates are a near- term risk, and can weigh on equity valuations; but what generally matters most for equities is why rates are rising. When tighter policy also reflects resilient economic activity, earnings growth can more than offset the effect of higher discount rates.

This is especially true for the UK market this cycle given the role of higher energy prices in the shift in outlook for global central banks. This should provide support

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for UK equities given around 18% of MSCI UK’s earnings this year are expected to come from the energy sector. Commodity strength at the start of the year led us to upgrade our earnings forecast in August for this year from 11% to 16%. With energy prices rising further since then, risks to our earnings estimate for this year are skewed to the upside, and should support further gains for UK equities. We have therefore upgraded the UK market’s absolute outlook to Attractive after the recent pullback, with earnings and valuations still supportive.

While we see supportive drivers, we expect UK equities to lag other regions. Our base case assumes that oil prices will ultimately be contained, and the rate hike cycle will be short-lived. In our view, this is more supportive for other markets more exposed to improving manufacturing/investment, or those with higher exposure to key secular themes such as AI or electrification. This does not mean that the UK offers no secular growth opportunities, but rather that these opportunities are better accessed via single-stock selections within the UK market. This also explains the very narrow market leadership of the UK over the past 12-18 months. As such, while we see upside for UK equities, growth may not be as robust there as in other regions; we expect earnings growth for the UK to slow to around 9% in 2027 as the commodity tailwind fades.

Within the region, we favor areas combining cyclical earnings recovery with structural growth drivers. This supports our preference for the Eurozone over the UK, and supports our Attractive ratings on European IT, industrials, banks, consumer discretionary and health care. Our “European Leaders” theme also identifies single-stock opportunities to benefit from structural and cyclical drivers in the region.

Note: The UK EPL reflects all UK stocks that are Most and Least Preferred across the CIO equity universe and is not actively managed for benchmark weights.

Chief Investment…