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European Stock Market: Attractive Valuations Offer Opportunities

Europe is known for some established brands, from L’Oréal to Louis Vuitton. However, the European stock market offers additional opportunities that may be lesser known.

The above infographic, sponsored by STOXX, outlines why investors may want to consider European stocks.

Attractive Valuations

Compared to most North American and Asian markets, European stocks offer lower or comparable valuations.

On average, European valuations are nearly 50% lower than U.S. valuations, potentially offering an affordable entry point for investors.

Research also shows that lower price ratios have historically led to higher long-term returns.

Market Movements Not Closely Connected

Over the last decade, the European stock market had low-to-moderate correlation with North American and Asian equities.

The below chart shows correlations from February 2014 to February 2024. A value closer to zero indicates low correlation, while a value of one would indicate that two regions are moving in perfect unison.

European equities had relatively independent market movements from North American and Asian markets. One contributing factor could be the differing sector weights in each market. For instance, technology makes up a quarter of the U.S. market, but health care and industrials dominate the broader European market.

Ultimately, European equities can enhance portfolio diversification and have the potential to mitigate risk for investors. 

Tracking the Market

For investors interested in European equities, STOXX offers a variety of flagship indices:

The EURO STOXX 50 tracks the Eurozone’s biggest and most traded companies. It also underlies one of the world’s largest ranges of ETFs and mutual funds. As of November 2023, there were €27.3 billion in ETFs and €23.5B in mutual fund assets under management tracking the index.

“For the past 25 years, the EURO STOXX 50 has served as an accurate, reliable and tradable representation of the Eurozone equity market.”

— Axel Lomholt, General Manager at STOXX

Partnering with STOXX to Track the European Stock Market

Are you interested in European equities? STOXX can be a valuable partner:

• Comprehensive, liquid and investable ecosystem
• European heritage, global reach
• Highly sophisticated customization capabilities
• Open architecture approach to using data
• Close partnerships with clients
• Part of ISS STOXX and Deutsche Börse Group

With a full suite of indices, STOXX can help you benchmark against the European stock market.

Learn how STOXX’s European indices offer liquid and effective market access.

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