2023
was
a
very
good
year
for
European
equities.
The
Morningstar
Europe
NR
index
(with
dividends
reinvested)
gained
15.5%
in
euros,
ending
December
up
4.0%.
For
the
whole
year,
large-cap
companies
outperformed
their
smaller
counterparts
by
a
wide
margin.
The
former
rose
by
21.8%
compared
to
16.0%
for
the
latter.
In
December,
however,
the
opposite
occurred:
small
caps
gained
7.6%
versus
3.6%
for
large
caps.
In
terms
of
investment
style,
2023
was
the
year
growth
companies
gained
29.5%;
versus
16.2%
for
value.
In
December,
the
Large
Growth
style
advanced
by
3.8%
thanks
to
the
good
performance
of
ASML
Holding
NV,
which
gained
9.4%,
and
the
two
luxury
giants –
LVMH
Moet
Hennessy
Louis
Vuitton
SE
and
L’Oreal
SA – which
posted
gains
of
5.2%
and
4.5%,
respectively.
There
were
also
significant
falls
in
this
market
segment,
however:
Adidas
[ADS]
(-4.1%),
Ferrari
[RACE]
(-7.7%),
SAP
SE
(-4.1%)
and,
above
all,
Prosus
[PRX]
(-11.2%),
all
witnessed
share
price
drops.
On
the
value
side,
companies
such
as
Rio
Tinto
[RIO],
HSBC
[HSBA],
Kuehne
+
Nagel
International
AG
[KNIN],
and
BASF
SE
[BAS]
stood
out
in
December,
with
gains
of
7.6%,
5.0%,
16.8%
and
14.3%
respectively.
In
terms
of
sectors,
2023
saw
several
sectors
rise
by
more
than
20%
in
euros.
The
biggest
winners
were
technology
(+33.4%),
industrials
(+29.8%)
and
financial
services
(+28.9%).
Only
one
sector
gained
less
than
10%.
This
was
the
defensive
consumer
sector,
with
a
gain
of
9.5%.
In
December
specifically,
the
real
estate
sector
stood
out
in
particular,
with
a
9.7%
gain,
in
the
heat
of
the
fall
in
long-term
interest
rates.
However,
the
energy
sector
was
one
of
the
few
to
suffer
a
decline
of
0.7%.
In
particular,
BP
[BP]
and
TotalEnergies
SE
[TTE]
fell
by
3.2%
and
1.1%
in
euros,
respectively.
Valuations
ended
the
year
in
undervalued
territory,
except
for
the
Large
Growth
segment,
which
ended
December
with
a
Price/Fair
Value
(PFV)
of
1.08
(i.e.
8%
overvalued).
In
terms
of
style,
Small
Value
remains
the
cheapest
style
and,
in
terms
of
sectors,
Real
Estate
is
the
cheapest,
with
a
PFV
Value
of
0.78.
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