Europe stocks a drawcard for value-hunting investors

Patrick Buncsi

4 April 2025

European equities are, for the first time in a long time, drawing a surge of interest from global investors, as attractive valuations and a volatile US market bring newfound attention to old world stocks.

Chad Padowitz, co-CIO at Talaria, sees increased investor interest in European stocks due to their relative undervaluation compared to their US counterparts.

He notes that the benchmark MSCI EMU index, representing European equities, trades at approximately 14 times expected earnings, while the S&P 500’s multiple stands at 21.

“This valuation gap presents compelling opportunities for investors seeking value in the European market,” he wrote in a recent commentary.

‘Sticky’ inflation, and the resulting hold further Fed rate cuts, he notes, have been proved “a headwind to economic growth”.

“Despite this, we see substantial opportunities in European markets,” Padowitz said.

As well, the Trump Administration’s aggressive tariff regime is dragging down US market growth.

Indeed, he notes, despite the US-centric ‘America First’ policy, the tech-centric NASDAQ 100 still derives approximately 51% of its revenue from outside the US, while the S&P 500 earns around 40% from international markets.

“This means that US economic policies affecting global economies, such as tariffs, also significantly influence the domestic equity market.

“With that, we believe the current equity valuations in the US are pricing in a far more optimistic outcome than has historically been the case.

“This significant valuation gap suggests that European equities may offer greater potential for long-term returns, particularly in a high-interest-rate environment.

“That’s why we see increasing opportunities in European markets, with indices like Germany’s DAX reaching record highs.”