UBS downgraded eurozone and Indian equities because of oil. Who did it upgrade?

UBS downgraded shares of India and euro zone because of oil risks. Analysts of the division of the Swiss bank UBS Global Wealth Management warn: because of the strong dependence on energy prices, these markets will be the main victims if the conflict in the Middle East drags on. At the same time, experts revised the rating of the Swiss market towards improvement.

Strategists at private client wealth manager UBS Global Wealth Management have revised their rating on European and Indian equities to "neutral". The decision was made against the backdrop that stock indices in markets dependent on energy imports (such as India and Europe) have fallen more than 9% since the start of the U.S. war with Iran. This is more than double the fall of the U.S. market, emphasizes Bloomberg.

Analysts fear that prolonged energy inflation may hold back economic growth, delay interest rate cuts and increase fiscal pressure. Experts warn that in Europe, sustained high energy prices could slow down the recovery of the industrial sector, while for India it would put an additional burden on the state budget.

Against this background, the Chinese market, among Asian markets, looks more stable: UBS analysts believe that Beijing will be able to maintain uninterrupted oil supplies through the Strait of Hormuz, and low inflation and the effect of "low base" after a long lagging behind neighbors in the region will give it an additional advantage.

At the same time, the UBS Global team upgraded the Swiss equity market and European healthcare sector to 'attractive', noting their defensive characteristics. Overall, the bank remains positive on equities as an asset class and believes investors should maintain long-term positions in this asset class.

India's situation looks particularly alarming in the eyes of UBS: the country buys abroad almost 90% of crude oil and about half of liquefied natural gas. At the same time, 50% of India's oil imports and three quarters of its LNG supplies pass through the Strait of Hormuz, which is now effectively blocked by Iran.

The military conflict is only exacerbating the country's long-standing structural problems, such as overvalued stocks, vulnerability to AI technology due to the lack of in-house chip production, and the continued depreciation of its currency.

Indian stocks are lagging global peers, with the rupee near record lows amid a sell-off by foreign investors. "You're actually paying a high price for earnings growth in the 15% range - almost like the U.S., but without the powerful driver in the form of AI," UBS Group chief strategist Bhanu Baweja emphasized in a Bloomberg commentary, noting that the likelihood of investors buying out the current decline is extremely Ma.

Last week, hedge funds recorded a record volume of net sales since April 2025: they actively increased their bets against U.S. and Asian stocks and in favor of the European market, Goldman Sachs analysts found out. Despite the general sell-off in the technology and financial sectors, investors remain selectively optimistic about Europe, the Bloomberg survey showed.

This article was AI-translated and verified by a human editor