31 July, 2026

German reforms and European equities: positioning for domestic cyclicals and supply chains

Summary

Key Takeaways

The reform plus fiscal package is genuinely large and potentially a regime change, but not yet an unqualified “buy Germany/Europe” signal. The principal upside risk is a confidence-led private capex cycle. The key downside risk is implementation failures and higher bond yields, which could turn a productive investment programme into a less equity-friendly fiscal expansion. Depressed confidence, reform leverage and limited FX tailwinds nevertheless all argue for clear relative winners and losers. We favour German domestic and small- and mid-cap stocks over large international exporters; the European reindustrialisation supply chain over China-geared and defensive exporter cohorts; and expect momentum in the Periphery to continue. The near-term complication, an Iran/Hormuz energy shock pushing the ECB toward hikes rather than cuts, may argue against a broader market rerating, but does not yet alter the relative framing.

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German reforms and European equities: positioning for domestic cyclicals and supply chains

Summary

Key Takeaways

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Read the full article on the Amundi Research center

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