{"id":21731,"date":"2025-01-31T12:31:38","date_gmt":"2025-01-31T11:31:38","guid":{"rendered":"https:\/\/latribune.lazardfreresgestion.fr\/?p=21731"},"modified":"2025-01-31T12:31:38","modified_gmt":"2025-01-31T11:31:38","slug":"small-caps-are-the-planets-set-to-align","status":"publish","type":"post","link":"https:\/\/latribune.lazardfreresgestion.fr\/en\/small-caps-are-the-planets-set-to-align\/","title":{"rendered":"Small caps: are the planets set to align?"},"content":{"rendered":"<h2>Chart of the Week<\/h2>\n<p>Companies with small market capitalisations have a track record of outperforming larger caps during central bank rate-cutting cycles. The effect comes with a lag: following the initial ECB rate cuts in 2001, 2008 and 2011, it took over six months for small caps to begin significantly outpacing large caps in Europe.<\/p>\n<p>On 6\u00a0June 2024, the ECB began its latest rate-cutting cycle. While the effects of declining policy rates have not yet passed through to small caps, an upward trend could emerge in 2025 if history repeats itself.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-21732 \" src=\"https:\/\/latribune.lazardfreresgestion.fr\/wp-content\/uploads\/2025\/01\/CHART-OF-THE-WEEK-3101.jpg\" alt=\"\" width=\"1020\" height=\"531\" \/><\/p>\n<h3><b>OUR <\/b><b>ANALYSIS<\/b><\/h3>\n<p>In terms of corporate fundamentals, small-cap companies often face tighter credit conditions and have access to fewer financing sources than larger-cap companies. Small caps are more reliant on floating-rate debt, meaning that high interest rates can significantly increase their financing cost and that the current backdrop of falling interest rates should work in their favour.<\/p>\n<p>In terms of stock market performance, small caps are typically more sensitive to macroeconomic change than larger-cap stocks. Lower interest rates should revive eurozone growth and boost business confidence for the year ahead. We also believe that a rise in the purchasing managers\u2019 index, especially manufacturing, would attract inflows to small and mid-cap funds and help to lift performance in the segment.<\/p>\n<p>***<\/p>\n<p>Written on 31 January 2025. This is not an investment advice. Opinions subject to change.<\/p>\n<p>See also: <a href=\"https:\/\/latribune.lazardfreresgestion.fr\/en\/united-states-is-it-possible-to-reduce-federal-spending\/\">https:\/\/latribune.lazardfreresgestion.fr\/en\/united-states-is-it-possible-to-reduce-federal-spending\/<\/a><\/p>\n<p>This document is not pre-contractual or contractual in nature. It is provided for information purposes. The analyses and descriptions contained in this document shall not be interpreted as being advice or recommendations on the part of Lazard Fr\u00e8res Gestion SAS. This document does not constitute an offer or invitation to purchase or sell, nor an encouragement to invest. This document is the intellectual property of Lazard Fr\u00e8res Gestion SAS. LAZARD FRERES GESTION \u2013 a simplified joint stock company with share capital of \u20ac14,487,500 \u2013 Paris Trade and Companies Registry No. 352 213 599. 25, RUE DE COURCELLES \u2013 75008 PARIS, FRANCE<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Chart of the Week Companies with small market capitalisations have a track record of outperforming larger caps during central bank&hellip; <\/p>\n","protected":false},"author":101016,"featured_media":21713,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[148],"tags":[1931,2241],"class_list":["post-21731","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-chart-of-the-week","tag-ecb","tag-small-caps-en"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Small caps: are the planets set to align?<\/title>\n<meta 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