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CNBC
4 hours ago
- CNBC
European small caps surged this year — and could have further to run, Goldman Sachs strategist says
European small-cap stocks have outperformed this year and are poised to continue their winning streak, according to a senior Goldman Sachs strategist. Speaking to CNBC's "Squawk Box Europe" on Thursday, Sharon Bell said a weak dollar and expectations of an improving regional economy were giving "a little bit of a kicker to small caps." "So small caps in Europe have outperformed this year, which is very different from the U.S. … [where] it's the mega caps that have done very well," she said. "Small caps tend to be more domestic — they tend to be euro earners in Europe, and the euro has done well. If you're a dollar earner, you're a big-cap international company. Translating that back into euros when the euro has been so strong [will have] been painful for you this year. So that's one reason small caps have done well." MSCI's Europe Small Cap Index, home to stocks from across the region including British real estate platform Rightmove and Swiss real estate firm PSP Swiss Property , has gained around 13% since the beginning of the year. The German SDAX index, comprised of 70 small cap companies, has gained close to 32% so far this year. In comparison, the pan-European Stoxx 600 is up 7.9% in the year to date, while the U.S. S & P 500 index has added around 7%. Bell also noted that part of small cap stocks' appeal right now is that they remain cheap relative to large and mega-cap companies. "The large caps [are] at all at all-time highs and extremely stretched in valuation terms," she told CNBC. "And of course, when you get a little bit cheaper versus the large caps, you become big targets. And we have seen a pick-up in M & A [which] I do think will continue to improve next year, and in the end, all small caps get bid up when you start seeing people's expectations for M & A improve." According to data from professional services giant PwC, global M & A volumes fell 9% year-on-year in the first half of 2025, but deal values were up by 15%. In the EMEA region, volumes and values were down 6% and 7%, respectively, compared to the first half of 2024. PwC attributed this largely to a drop in the number of megadeals in the U.K. compared with the previous year. Bell isn't alone in seeing opportunities among small European firms. Bank of America's July European Fund Manager Survey found that a net 44% of respondents expect small caps to outperform large caps over the next 12 months. The regional survey included responses from fund managers who collectively manage assets worth $172 billion. That view marks a massive pivot in position on small cap stocks. Just one month earlier, only 7% of fund managers told BoA they believed small caps would outperform. BoA strategists said in the report on the survey findings that there was currently "a clear preference for European cyclicals, value [and] small caps stocks." Christopher Hart, a fund manager at Boston Partners, told CNBC on Friday that, while he didn't disagree with the pro-small cap view "from an idiosyncratic perspective," it was important to take a considered approach to investing in the space. However, Hart — who manages Boston Partners' $274 million Global Equity Fund — did note that there was "a sweet spot" among small caps, with some smaller companies offering both value and a strong growth trajectory. He urged not to treat small-caps as one.
CNBC
5 hours ago
- CNBC
Singapore dollar exhibits safe-haven currency features. But it's no yen or Swiss franc — yet
In times of uncertainty, investors turn to safe-haven assets — gold, Treasuries as well as currencies such as the Japanese yen, U.S. dollar and the Swiss franc. These assets are expected to retain or increase their value during periods of market turbulence. While the greenback remains the world's reserve currency of choice, it has been weakening. The dollar index has fallen over 9% year to date. The outlook for the Japanese yen has been clouded by trade worries. Against such a backdrop, analysts suggest there could be an alternative in the making: the Singapore dollar. Christopher Wong, FX strategist at OCBC told CNBC that the SGD already functions like a "quasi safe-haven" currency, particularly within Asia and emerging markets. "While it does not possess the same global status as traditional safe havens like the USD, JPY [Japanese yen] , or CHF [Swiss franc], SGD tends to exhibit defensive characteristics during episodes of financial stress — especially those centered in Asia." Wong said. The SGD has been strengthening against the dollar, gaining about 6% year to date, with Jefferies reportedly forecasting that the currency could reach parity with the dollar in the next five years. "The SGD is indeed one of the world's safe havens, but it may not be 'the' next safe haven," according to Omar Slim, co-head of Asia Fixed Income at PineBridge Investments. "What makes it a safe haven is the strength of Singapore's institutional framework, the solid and resilient economic foundations of Singapore, as well as strong policy making, especially when it comes to fiscal prudence," he said. Felix Brill, chief investment officer at VP Bank, agrees that the SGD has many characteristics of a modern safe haven, including macroeconomic stability, strong institutions, a large current account surplus, and low political risk. Brill said that Singapore's monetary policy framework has delivered "exceptional stability" to the currency, which is exactly what safe haven flows seek. Unlike most nations, Singapore does not use interest rates to manage its currency, but instead strengthens or weakens the Singapore dollar against a basket of its main trading partners in a policy band. The exact exchange rate is not set, rather the SGD can move within the set policy band, whose precise levels are not disclosed. Jeff Ng, head of Asia Macro Strategy at Sumitomo Mitsui Banking Corporation, estimates that the policy band has a width of 4%, and said this management of the SGD means that there is limited volatility, which gives reduced risks and more certainty over the short term. While the SGD is on the right track, experts said there were some roadblocks in its way to becoming the next widely accepted global safe-haven currency. The first is the size of the SGD market. Data from the Bank of International Settlements in 2022 revealed that the USD made up 88% of the forex market, while the yen and the Swiss franc made up 17% and 5%, respectively. The Singapore dollar made up just 2%. The BIS survey is conducted every three years, the next one is due in September 2025. "Although Singapore is highly respected, it has a small economy, and the SGD does not have the trading volume or bond market depth of the yen or franc," VP Bank's Brill said. Furthermore, the monetary policy that Singapore has in place that has delivered exceptional stability for the SGD is the very thing that constrains it. Brill explains as the currency is "managed," it limits markets speculation and large-scale positioning, which in turn cap its liquidity and depth. These are key traits that investors look for in a true global safe haven. "So yes, the framework helps credibility — but hinders scale," Brill said. Other factors include Singapore's export-reliant economy. Figures from the World Bank show that exports made up 178.8% of the city-state's GDP in 2024. As such, the Monetary Authority of Singapore might not have appetite for the SGD to appreciate too much, according to Trinh Nguyen, senior economist at Natixis Corporate & Investment Banking. "Should investors buy too much SGD assets, that would push up the SGD," Nguyen pointed out, adding "If the SGD becomes uncompetitive ... MAS would not tolerate that as it sees it as detrimental to Singapore's competitiveness." SGD could be used for mitigating currency risk. Jean Chia, global chief investment officer at Bank of Singapore, said that the SGD could play a "very important part in terms of diversification ... So this could be the third currency in many of your currency diversification discussions." Experts agreed that Singapore's currency holds potential to gradually acquire the status equivalent to that of the Swiss franc if not the yen or the greenback. Jen-Ai Chua, research analyst for Asia at Julius Baer, said does not rule out the possibility that the SGD could evolve from the Asian safe haven to a global safe haven, but it could take time. VP Bank's Brill pointed out that safe haven status is built over decades of crisis-response behavior, and while the SGD has performed well during Asian downturns, it is not yet the first port of call during global slowdowns. "Over time, greater international use, more accessible local markets, and consistent stability could gradually change that," Brill said. Pinebridge's Slim is also optimistic about SGD's future at a time when the appeal of traditional safe havens has taken a hit: "The world is increasingly looking for safe havens, and I would expect the SGD to be top of that list ... while it might not become what the USD and JPY traditionally were, it will be increasingly seen as the CHF of Asia."
Business Upturn
5 hours ago
- Business Upturn
ICICI Bank shares jump nearly 2% as Q1 profit rises 15.4% YoY to Rs 12,768 crore, beats estimates
ICICI Bank shares were in the green on Monday, rising nearly 2% after the lender delivered a strong set of numbers for the June quarter, comfortably beating market expectations on both profit and core income. As of 9:16 AM, the shares were trading 1.51% higher at Rs 1,447.40. Net Interest Income (NII)—the bank's key revenue driver—rose 10.6% year-on-year to ₹21,635 crore, topping CNBC-TV18's estimate of ₹20,923 crore. Net profit came in at ₹12,768 crore, up 15.4% from the year-ago period, and significantly higher than the expected ₹11,747 crore. Asset quality remained steady. The gross non-performing assets (GNPA) ratio was flat at 1.67%, while net NPA inched up slightly to 0.41% from 0.39% in the previous quarter. Provisions, however, saw a notable jump to ₹1,814 crore compared to ₹890 crore in Q4. On the business front, the bank saw robust loan growth. Total advances rose 11.5% YoY and 1.7% sequentially to ₹13.64 lakh crore. Retail loans, which make up over half the portfolio, grew nearly 7%, while business banking loans shot up close to 30% YoY. Rural lending, however, saw a dip. Deposits were also healthy, rising 12.8% YoY to ₹16.08 lakh crore. Average deposits grew 11.2% during the quarter. The bank continued to expand its footprint, adding 83 branches and taking the total count to 7,066, with over 13,000 ATMs across the country. On the asset quality side, ICICI Bank reported gross slippages of ₹6,245 crore, with net additions at ₹3,034 crore after accounting for recoveries and upgrades. Bad loan write-offs stood at ₹2,359 crore, while the provision coverage ratio remained strong at 75.3%. Disclaimer: The information provided is for informational purposes only and should not be considered financial or investment advice. Stock market investments are subject to market risks. Always conduct your own research or consult a financial advisor before making investment decisions. Author or Business Upturn is not liable for any losses arising from the use of this information. Ahmedabad Plane Crash Aman Shukla is a post-graduate in mass communication . A media enthusiast who has a strong hold on communication ,content writing and copy writing. Aman is currently working as journalist at
