The European Spring

For years, global investors have been underweight in European equities, citing a long list of structural issues that have hindered profitability and growth compared to the US. While these challenges remain unresolved, something is shifting on the Old Continent, fueling a renewed interest in European stocks.

As we have highlighted repeatedly, the significant valuation gap between European equities and their US counterparts was unsustainable in the long run, only exacerbated by the dominance of the "Magnificent Seven." The missing catalyst to drive capital back to Europe has now emerged—ironically, in the form of Trump 2.0. Not only are portfolio managers reassessing their US allocations, but European policymakers, particularly in Germany, are stepping up with crucial infrastructure spending packages.

At ECP, we recognize that Europe's structural issues will not disappear overnight, and the road to recovery remains long and uneven. However, we remain committed to quality companies trading at a discount to their intrinsic value. The European spring, it seems, has begun.