Marginalized

The role of European equities in global trading has declined dramatically. According to Société Générale, their share of global trading volumes has fallen from nearly 25% in the early 2000s to around 3% today. Their share of global market capitalisation has also dropped, from close to 30% to approximately 13%.

This goes beyond the relative underperformance of European indices. It reflects a gradual migration of liquidity and capital towards the United States and, to a lesser extent, Asia. US markets benefit from dominant technology companies, deeper capital markets and a stronger ability to attract new listings.

Europe nevertheless remains home to many high-quality global companies, often trading at a significant valuation discount to their US peers. For active investors, this marginalisation may therefore also create opportunities, provided they remain highly selective.

Does Europe’s valuation discount represent a long-term opportunity, or does it reflect a deeper structural problem?