Europe's valuation discount is 'starting to crystallise'

Sentiment finally turns positive

Investor sentiment towards European stocks seems to have finally turned positive fuelled by a strong overall earnings season and more attractive valuations.

Although these arguments could have been discussed last year, there is now further supporting evidence that the momentum is sustainable. The bull case for European equities has two main dimensions. The first one is the sustainability of the positive earnings momentum and the second one is the relative valuations vs other markets.  On momentum, earnings have turned after six years of disappointing results, not only because of the base effect of energy and banks but also an improvement in both revenues and earnings.  We are seeing positive GDP growth across the continent, inflation c...