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Demand for European stocks continues to rise despite the upcoming French Election due to overvaluation of U.S. assets and equities.

Cheaper EU Stocks VS. US Stocks

Global stock market investors are now turning their attention away from US stocks to stocks in the Eurozone according to fund managers.

While assets from the United Kingdom is currently least preferred by investors, equities from the Eurozone’s allocation has hit a 15-month high with US equities sinking to the lowest levels since 2008.

Bank of America Merrill Lynch chief investment strategist Michael Hartnett said that investors are now getting out of U.S. assets in a hurry to invest in European shares as more and more found stocks from the U.S overvalued and at increasing risk of a delayed US tax reform.

According to a survey, more than 80% of investors have currently found US stocks to be overvalued while 32% have found global stocks to be overvalued which shows that more than fifty percent of global investors are seeing US stocks as expensive.

Equity strategists have also commented that the upcoming French presidential elections have made European shares bullish and the rate of Europe’s earnings recovery rave risen higher than expected.

Despite the risk of the European Union being disintegrated, the concern has intensely declined in the past couple of months while risks regarding the corporate tax reform and trade war between other countries have become the main concern for investors.


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Stocks in the European region have also turned into a much more positive side where the most positive numbers have been seen compared to last seven years with the increasing investor confidence supporting the improving economic condition and with the banking sector in recovering from the past couple of months.

Stocks have also rallied by 15 more times compared to US stocks with the European elections remaining to be the current major risk for global investors who shifted to EU stocks.

US Stocks Investors Positive

Despite news of investors flocking into cheaper European equities, some U.S. investors and analysts have remained optimistic regarding US stocks despite declining returns since the beginning of the year.

While others have commented on the overvaluation of U.S. stocks, analysts have pointed out that stocks under the S&P 1500 were recorded to have been trading above their 10-week moving averages which would imply that the market is oversold and is nearing a recovery soon.

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