'I like Mps: it has earnings growth above the industry average'
'Other interesting companies include Do&Co, GekTerna and Ferrari Group'
Key points
Marco Midulla, head of mutual funds at Symphonia Sgr, is closely monitoring the performance of the equity markets over the coming months, and at the moment he does not believe that we are on the eve of a bubble in technology stocks, even though it is precisely this sector that is driving the stock market rally. He also recommends easing up on cyclical stocks. Another suggestion is to pay particular attention to the trend in US inflation, which could affect the Fed's decisions. Returning to Europe, the manager has a positive view of the Italian market.
Do you think the list valuations are correct or are they too high?
Making an accurate judgement on market valuations is never easy; global market multiples are a function of earnings growth and are obviously correlated with the flows of large institutional investors and smaller but increasingly numerous retail investors. The artificial intelligence theme has helped markets to soar in the recent period and caused valuations of many companies to rise to relative highs, in sectors that are also marginally impacted, but driven by the increasingly present thematic baskets. This factor, in addition to the high correlation that characterises all asset classes (gold, equities, bonds, etc.), is causing us to trigger some red flags.
Do you think we are on the eve of a possible bursting of the bubble on technology stocks?
At the moment, the sector is driving earnings growth in the world's major stock markets and is the largest contributor to expected growth in the coming years. I would not speak of a bubble, also because within technology we have a lot of valuation dispersion. We can speak of very high positioning in baskets on artificial intelligence, including stocks from other sectors that are on historically high valuations without having their growth estimates particularly impacted.
What investment strategy are you adopting?
Symphonia SGR manages several equity funds. The main strategy we adopt in the funds is fundamental analysis. Having undervalued companies in the portfolio is our primary objective. In this market environment we are cutting risk and rotating the portfolio in less cyclical sectors (infrastructure, telecom) because we think that the growth estimates of the more cyclical sectors (cars, consumption, luxury) are too optimistic.
Which geographical areas are you most exposed to
The area we are tactically positive on is China because, despite its strong performance since the start of the year, it still trades on low valuations when adjusted for expected growth. The area we are more cautious on is Europe, which has performed very well, driven by growth expectations in 2026 linked to Germany's spending plan, despite earnings and GDP growth in 2025 being around 0%. In our view, expectations for 2026 are too high and we risk a reduction in estimates in the coming months.
