GSGoldman SachsSELL
Strategy Espresso Europe – The secret outperformer
- **Europe's EPS Growth & Structural Resilience**: H1 2026 STOXX 600 EPS up +14% y/y (strongest in 3 years), FY 2026 EPS forecast upgraded to 15% (from 10%); key sectors (Financials, Pharma, Tech, Energy, Utilities, Telecoms, Aerospace) show minimal vulnerability to China import competition.
- **Debunked Outperformance Myth**: STOXX outperformed S&P 500 since 2025 despite tariff shock/energy crisis; European Banks (SX7P) outperformed Magnificent 7 since 2022, driven by higher rates, HALO stocks, and Germany’s fiscal policy.
- **Structural Flow Catalysts**: Best foreign inflows in 10 years (ex 2021), fueled by corporate buybacks/M&A and diversification from US concentration; €200bn+ equity issuance in 12 months signals robust capital inflows.
- **Capital Allocation Gap**: European domestic risk capital underweight in high-growth assets (<14% in >10% sales growth bands vs S&P 500’s 48%), driven by low household equity allocation, aging populations, and regulatory inertia.