European stocks are significantly cost-effective, with low valuations, strong earnings expectations, and full market confidence.
Even so, it seems that it will not be easy for European stocks to overtake US stocks.
U.S. tech stocks are still on the rise, while institutions are quietly turning their attention to European markets. Valuations in Europe** are low, and investors have strong expectations for future earnings recovery. Therefore, it is recommended that long-term investors should hold Europe**.
Low valuations in Europe** are a big opportunity for investors. Goldman Sachs Group strategic analysts said bluntlyEurope** has a more attractive valuation than US equities after a long period of being unfavourable to investors。Dh**Al Joshi, chief strategist at BCA Research, said bluntly that after the US tech giants last year's big **, they are counting on their earnings to continue to grow sharply"Unrealistic"。Joshi added: Unlike the United States, there is no bubble in Europe, so Europe is a good option in the coming years.
In addition to low valuations in Europe, there is a strong expectation that corporate earnings will pick up in the future. Robert Almeida, Global Investment Strategist at MFS, said bluntly: ".Europe is more attractive” 。Almeida explained:
European earnings are declining because they are more sensitive to the economy. This is also the reason for the poor performance (in the past)**. Now, Europe** has lower earnings risk and valuation risk than the US**.Earnings of companies in the European STOXX 600 index fell by 3% last year, Sanford CBernstein strategist Sarah McCarthy expects it to be in 2024**42%, and the risk of a significant downward revision of earnings estimates during the year is low.
Goldman Sachs strategist Sharon Bell expects European stocks to benefit from lower energy costs and improved demand in sectors related to the economy.
As mentioned earlier, the performance of the "Big Eight" of European stocks is better than that of the "Seven Sisters" of US stocks. Although the valuation of the "Big Eight" is relatively high, Bell still said that the "Big Eight" of European stocks have defensive attributes as large European companies, and the future outlook will be more optimistic. Investors' strong bets on European earnings are now also boosting confidence in the market.
Bank of America's February survey showed that the majority of European** managers believe the region** is undervalued. And a month ago, most people thought the *** in the area was too high. A year later, the proportion of investors who will increase from 50% three months ago to 78%.
This is despite the fact that investors in the pro-European camp believe that the era of long-term underperformance in Europe** is coming to an end. However, the odds of European stocks overtaking US stocks still seem to be small, and European stocks have only overtaken them twice in the past decade.
The European STOXX 600 index has only ** 26%, which is not yet the all-time high set in January 2022. If denominated in US dollars, the index also increased by 02%, which is clearly behind the S&P 500, which is at an all-time high.
Roland Kaloyan, head of strategy at Société Générale in Europe, said: Investors have good reasons to continue to be bullish on U.S. stocks, because the U.S. has strong expectations for AI development and economic growth.
Of course, there is also some uncertainty in US stocks. The timing of the Fed's rate cut has been unclear, and the surge in U.S. tech stocks has been increasingly questioned. , announced that the US CPI in January increased by 3 year-on-year1%, beating market expectations by 29%, which also frustrated investors' optimistic expectations of the Fed's easing policy.