European Equities: A New Wave of Investor Interest

In recent years, investors largely favored US stocks, leaving European equities underappreciated. However, this trend seems to be changing in 2025. With attractive valuations and positive economic signals, the focus is gradually shifting back to Europe, particularly on small- and mid-cap stocks.

European equities have experienced promising performance, advancing about 10% in early 2025. This shift is partly driven by differences in macroeconomic variables in the US and Europe. While the US faces uncertainties in government spending and tariffs, Europe is seeing stabilizing economic conditions.

The European Central Bank's projected rate cuts could bolster growth. Despite fears of US tariffs, local strategies mitigate the potential impact on European sales. The current market environment favors a value-based investment approach.

European small and mid caps present an enticing opportunity due to their attractive valuations and potential for growth. Active stock-picking, focusing on innovative and stable companies, offers investors favorable prospects in this evolving landscape.