Market valuations

The relative attractiveness of major equity markets remains largely unchanged since the recent decline of the Mag-7. The S&P 500 is now trading at 21.1 times forward earnings—slightly cheaper than at the start of the year but still at a historically high premium compared to its 20-year average.

Europe continues to trade at a significant discount to the U.S. in terms of price-to-earnings, as it has for the past two decades. However, following a strong rally, European stocks have moved above their long-term average valuation. The same holds for emerging markets, while Japan remains stable.

At ECP, we remain focused on selecting individual stocks at what we believe are attractive valuations. The recent market turbulence provided opportunities to introduce new names to our portfolios and strengthen existing positions.