Is the eurozone supportive for small caps?

Economic momentum in the eurozone has been weakening over the past year, causing European small-cap stocks to lag behind their US and Japanese counterparts.

GDP boost However, the macroeconomic backdrop is becoming more supportive. Oil prices have continued to slide, providing a boost for European companies, since the region is a large net energy importer. According to our calculations, a 25% decline in oil prices adds 0.45 percentage points to the eurozone's GDP, above the weighted average for developed markets. Within the region, Belgium, Portugal and Spain are among the biggest beneficiaries.  Industrial companies will be the main beneficiaries of reduced energy costs. In contrast, we remain cautious on energy stocks, because oil p...