The European stock market showcased remarkable stories of growth and resilience in 2024, as companies across sectors like green energy, defence, and technology capitalised on emerging opportunities. The year’s top-performing large-cap companies delivered stellar results, reflecting innovation and adaptability in the face of global challenges.

Top Performers of 2024

10. SAP SE
German software giant SAP SE saw a 71.56% year-to-date gain, propelled by robust growth in its cloud services. The company’s integration of generative AI and strategic acquisitions of AI startups cemented its leadership in enterprise software.

9. Leonardo S.p.A.
Italian defence firm Leonardo S.p.A. posted a 72.41% return, driven by heightened European defence spending. Record helicopter orders and growth in its cybersecurity division further boosted performance.

8. argenx SE
Belgian biotech argenx SE delivered a 76.01% return, thanks to the continued success of its autoimmune treatment, Vyvgart, alongside strong sales in major global markets and positive clinical trial outcomes for pipeline drugs.

7. NatWest Group
UK-based NatWest Group gained 82.22% as rising interest rates improved net interest margins. Cost-cutting measures and growth in mortgage lending also contributed to its strong performance.

6. Rolls-Royce Holdings
The aerospace giant achieved a 92.06% gain, benefitting from a resurgence in international travel and increased demand for wide-body aircraft engines. Operational streamlining and the reinstatement of dividends further bolstered investor confidence.

5. International Consolidated Airlines Group (IAG)
IAG, parent company of British Airways and Iberia, saw its stock rise by 94.52%, driven by surging passenger travel and improved profit margins through the adoption of fuel-efficient aircraft.

4. Rheinmetall AG
German defence contractor Rheinmetall AG posted a 115.89% gain, capitalising on increased NATO contracts and expanded ammunition production amid geopolitical conflicts.

3. UCB SA
Belgian biopharmaceutical firm UCB SA soared 140.05%, driven by FDA approval of a new neurological treatment and strong sales of immunology therapies. Promising late-stage trial results also buoyed investor sentiment.

2. Kongsberg Gruppen ASA
Norwegian defence and maritime leader Kongsberg Gruppen ASA delivered a 177.40% return, bolstered by record demand for missile systems and innovations in autonomous maritime technology.

1. Siemens Energy AG
Siemens Energy AG emerged as the year’s top performer with an extraordinary 326% gain. The company overcame wind turbine quality issues and secured record contracts in renewable energy and hydrogen projects, stabilising its financial position with government-backed guarantees.

Looking Ahead to 2025

While some top performers like Rolls-Royce and Leonardo have maintained momentum from 2023, the upcoming year brings new uncertainties. Challenges such as potential US trade tariffs under Donald Trump’s presidency, European Central Bank policy shifts, and prolonged geopolitical conflicts could reshape market dynamics.

Emerging opportunities in green energy, artificial intelligence, and defence technology are expected to define the next wave of winners. For investors, diversification and adaptability remain key strategies for navigating an evolving economic landscape.

Europe’s banking sector is currently seeing a surge in takeover talks, with major players like Italy’s UniCredit, France’s BNP Paribas, and Spain’s BBVA eyeing acquisitions across the continent. However, while high interest rates have boosted profits and fueled the desire for mergers, political and national concerns may hinder the growth of pan-European deals.

UniCredit, led by Andrea Orcel, has increased its stake in Germany’s Commerzbank, following recent expansions in Romania. Meanwhile, BNP Paribas is reportedly considering a bid for insurer AXA, while BBVA presses ahead with its acquisition of Sabadell.

According to Hyder Jumabhoy, M&A partner at White & Case, mergers and acquisitions in the banking sector are “hot” at the moment. This marks a shift from the post-2008 period when banking M&As slowed dramatically due to tougher regulations and financial conditions. Between 2008 and 2020, the number of M&A deals dropped by about two-thirds in terms of assets transferred.

One of the driving factors behind the current merger wave is the high lending rates of recent years, which have allowed banks to generate substantial profits. This has increased their capacity for acquisitions. Furthermore, the decline in borrowing costs is prompting banks to seek out ways to diversify their revenue streams and adapt to changing customer expectations.

“Customers now want a variety of products, not just one,” Jumabhoy explained. This shift has led banks to consolidate expertise and operate multiple brands under one umbrella, which mergers can help facilitate. In the case of cross-border mergers, these deals also offer the opportunity for banks to leverage geographical expertise.

The notion of creating larger banking institutions to increase competitiveness is gaining traction, with experts like Marco Troiano, head of financial institutions at Scope Ratings, stressing the importance of scale. A larger balance sheet, for example, can help banks compete globally, particularly in investment banking.

However, a significant barrier to pan-European mergers is the deeply ingrained preference for “national champions.” EU data reveals that 80% of banking M&A deals in the eurozone between 1999 and 2020 were domestic. This national mindset is evident in the resistance to cross-border takeovers, such as German Chancellor Olaf Scholz’s opposition to UniCredit’s acquisition of Commerzbank.

Meanwhile, French President Emmanuel Macron has expressed support for European banking consolidation, though political backing does not guarantee success. Even with Macron’s endorsement, bureaucratic hurdles remain for cross-border deals, particularly around EU projects like a common deposit scheme.

While large-scale mergers may offer opportunities to strengthen banks, the question of financial stability is another concern. Thierry Philipponnat, chief economist at NGO Finance Watch, warns that mega-banks could become “too big to fail,” posing risks to the wider economy. However, others argue that mergers could improve stability by better distributing risk across countries.

Despite these challenges, the European banking sector is expected to see further consolidation, with larger, pan-European mergers likely to be announced in the first half of next year.