For the past 10 years, Europe has not been popular among global equity investors. The European debt debacle and the bail-out of Greece in 2010 contributed to the long-standing negative sentiment towards “old” Europe. Low productivity, weak institutions, and a high unionization rate are also often cited as reasons why investors are weary of Europe. From an investment standpoint, this lack of interest has been justified with European equities underperforming U.S. stocks by more than 90% since the depth of the global financial crisis in 2009. This lack of financial strength was also visible in the foreign exchange market, with the Euro losing 30% against the U.S. dollar since its 2008 peak. We have observed, however, that recent sentiment towards European equities, and particularly Eurozone stocks, has dramatically changed, with global equity strategists turning overweight to the point of converting Eurozone stocks into a crowded trade.

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