Goldman Sachs Research has applied its "HALO" framework — Heavy Assets, Low Obsolescence — to European equities, arguing the region's mix of old-economy sectors and Germany's fiscal spending plans make it a strong fit for a broader shift back toward tangible, hard-to-replicate assets. The bank estimates energy, materials, utilities, capital goods and select semiconductor names make up roughly 40% of MSCI Europe, and frames the opportunity as a stock picker's market rather than a sector-wide re-rating.
Goldman Sachs Research argues Europe is where the bank's "HALO" investment thesis works best, built around companies that own expensive, hard-to-replicate physical capital. The bank estimates that energy, materials, regulated utilities, capital goods and select semiconductor names make up around 40% of the MSCI Europe index, giving the region a structural tilt toward the theme.
Germany's fiscal push adds weight to the thesis
The note also points to Germany's spending plans as a supporting factor. Goldman estimates Germany's fiscal impulse could add 50 to 60 basis points to GDP through defense, energy transition and infrastructure spending. That is a meaningful figure against German GDP growth of just 0.2% in 2025.
HALO stands for Heavy Assets, Low Obsolescence, describing firms whose physical capital — grids, pipelines, industrial plants — stays economically relevant across technology cycles rather than being displaced by the next wave of innovation. Goldman's thesis rests on three pillars: a security premium attached to energy, water and commodity access, the scarcity of the physical assets underpinning AI infrastructure build-out, and wide performance dispersion that favors active stock selection over passive exposure to the theme.
A framework built on someone else's term
The bank frames the opportunity as increasingly a stock picker's market rather than a broad sector re-rating, given how much balance sheet strength and pricing power vary across capital-intensive names. Yet the HALO label itself predates Goldman's research. Ritholtz Wealth Management CEO Josh Brown coined the term in a Substack post on February 8, 2026, and Goldman strategists published their own framework around it sixteen days later, on February 24.
Goldman has since extended the same lens to emerging markets, suggesting HALO is becoming a cross-regional framework rather than a Europe-only call. The bank's pitch centers on tangible assets whose scarcity and slow replication, it argues, protect incumbents and support durable pricing power as capital shifts away from asset-light business models.
Source: investingLive
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