Perspectives meet conviction
Europe edges its way into the heart of global portfolios
Introduction
Europe is re-emerging as a strategic long-term investment for global portfolios, driven by a valuation gap that is one of the widest in decades. The S&P 500’s 22x forward P/E compared to Europe’s 14.6x1 offers value, income, and diversification. Structural reforms, fiscal ambition like Germany’s €500 billion fund, and EU initiatives such as REPowerEU and Readiness 2030 are boosting sectors like biotech, semiconductors, aerospace, and digital infrastructure. With stable ECB guidance and governance, Europe presents a credible alternative to the concentrated US market and some volatile emerging markets, reducing single-market and sector risks for investors.
Purpose of the Survey
After a decade of US market dominance, Asia Pacific investors are reassessing strategies as Europe re-emerges as a compelling opportunity. A BNP Paribas Asset Management survey of 300 institutional investors conducted between August 2025 and September 2025 across Australia, Hong Kong, Japan, and Singapore shows a clear shift in sentiment and allocations toward Europe, driven by attractive valuations, solid earnings potential, and a more stable macro and policy outlook. Download the complete Europe Rising Survey.
Spotlight 1: Attractive Valuation and Growth Potential – Reasons for Pivoting towards European Equities
From Tactical Exposure to Strategic Conviction
European equities are gaining renewed attention from APAC investors, and that’s further proven through the Europe Rising: 2025 APAC Investor Pulse survey. This shows a renewed interest in Europe that is being driven not by short-term sentiment, but by a confluence of valuation advantage, earnings recovery, and a wave of fiscal transformation unfolding across the region.
Interpretation: Structural Tailwinds Support Sustained Allocations
Investors are responding to structural tailwinds—fiscal reform, innovation-led sector growth, and monetary policy clarity. Europe is now viewed not as a tactical trade, but as a region capable of delivering competitive returns and anchoring diversified portfolios.
Spotlight 2: European Fixed Income: Resilient Yields, Reinforced by Policy Clarity
Stability, Income, and Policy Credibility
As global rate cycles diverge and volatility endures, European fixed income is becoming a dependable source of yield and stability for APAC investors in a shifting rate environment.
Interpretation: Stability and Income Anchor Returns as Rates Reprice
European fixed income has evolved from a yield play to a strategic allocation, offering stability, income, and downside protection in a shifting rate environment. Private credit is increasingly favored for its yield premium and low correlation to traditional assets.
Spotlight 3: Active Allocation and Alternatives Strengthen the Modern Portfolio
Beyond 60/40: Building Portfolios for Resilience and Growth
As the 60/40 model evolves, APAC investors are adopting dynamic allocations that incorporate alternatives, active allocation, and new sources of risk and return.
Interpretation: Dynamic Construction Improves Resilience
Modern portfolios have moved beyond static allocation, adopting multi-dimensional strategies that blend active and passive, public and private, growth and resilience. Active allocation is key to navigating complexity and seizing new opportunities.
Europe Rising Survey report
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[1] Data as of 8 September 2025. Sources: IBES, FactSet, BNP Paribas Asset Management.
[2] Data as of 8 September 2025. Sources: Factset, BNP Paribas Asset Management.
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