Opportunities in Germany
EWG•Autos now a smaller part of the DAX
The good news is that some of those sectors, particularly autos, now make up just a small share of the market cap of the blue-chip DAX index .GDAXI.
Autos, for example, make up just 7% of the DAX market cap, from over 20% in 2016.
"As a result, Germany’s strongest opportunities increasingly sit outside the traditional pillars of its equity market," they note.
Goldman sees strong German earnings growth
German earnings growth is likely to be one of the strongest among developed markets in 2027, Goldman Sachs believes, as its equity market is exposed to many of Europe's key growth themes.
Consensus expects German EPS growth of 17% next year, well above the 9% expected for the STOXX 600 .STOXX.
"The macro backdrop remains supportive of Cyclicals," writes Goldman Sachs.
Structural tailwinds could support cyclicals
"Improving growth, rising defence and infrastructure spending, electrification, energy security investment and AI-related capex continue to provide powerful structural tailwinds."
That said, some of Goldman's key underweights are particularly relevant for Germany, as the bank is cautious on chemicals, autos and healthcare.
