After a jubilant beginning to 2023, eurozone small stocks and midcaps were slammed by the U.S. regional bank crisis. In March, investors switched to risk-off mode out of fear that the banking situation would seriously impact small companies, which depend heavily on bank financing. The combination of geopolitics, challenging macroeconomic conditions and numerous rate hikes didn’t help small stocks, which once again saw net outflows at the end of the year. Outperforming sectors included technology and finance, while defensives underperformed, especially health care. Despite the positive months of November and December, the discount in valuation between small and large European stocks continued to widen in 2023.
 
Amplegest Midcaps outperformed its benchmark index by +56 bps in December. We took profits after the sharp rebound of SES-imagotag, and we sold our position in Barco, whose recently updated targets for 2023 seem unrealistic.
 
Weaker inflation and lower interest rates in 2024 would be favourable to valuations in our asset class. Meanwhile we are maintaining a balance between growth and value, with a portfolio of shares which have little debt and strong visibility.