Foreign Media: Underestimated Strong Performance of European Stock Markets Emerges

Foreign media reports that the performance of European stock markets this year has exceeded many investors' expectations. Despite the long-standing preference for U.S. stocks in the market, Europe is often labeled as slow-growing and lacking in technological content. However, the pan-European Stoxx 600 index has still risen by about 10% this year, only slightly lower than the 13.5% increase of the S&P 500 during the same period.

Goldman Sachs Says Market Narrative is Too One-Dimensional

CNBC cites a report from Goldman Sachs dated August 10, which states that investors' impressions of the European market do not fully align with its actual performance. Goldman Sachs believes that since 2022, European bank stocks have performed significantly better than the "Big Seven" U.S. tech companies. Furthermore, since the beginning of 2025, even amidst tariff shocks and an energy supply crisis, the overall performance of European stock markets has still outperformed the S&P 500.

Goldman Sachs also refuted the view that "Chinese competition is fully suppressing European companies." The report states that the structure of the stock market is not equivalent to that of the real economy. The sectors in the European market that hold significant weight—finance, pharmaceuticals, technology, energy, utilities, telecommunications, and aerospace and defense—are not particularly exposed to competition from low-priced Chinese goods.

Automotive Sector Shows Significant Weakness

The European automotive industry remains the weakest link in the market. Over the past few years, this sector has continuously faced pressures from slowing demand for electric vehicles, loss of market share to Chinese automakers, and rising financing costs, with sales not yet recovering to pre-pandemic levels.

Data shows that the Stoxx automotive index has fallen by 16% this year. Among them, Volkswagen's stock price has dropped by 27.6%, and Stellantis has seen a decline of 51.9%. However, Goldman Sachs points out that the automotive sector accounts for only about 1% of the total market capitalization of European stock markets, thus limiting its drag on the overall index.

BNP Paribas Asset Management: Europe is More Like an AI Beneficiary

BNP Paribas Asset Management believes that Europe may not become the core region for AI technology development, but it is more likely to benefit from AI applications, with traditional industries like automotive potentially reaping rewards.

Sophie Huynh, portfolio manager and strategist at BNP Paribas Asset Management, stated that some deeply valued sectors in Europe are already very undervalued, and the market has not fully discussed their potential upside. She also mentioned that the positive factors related to U.S. consumption have largely been priced in by the market, while the economic momentum in Europe has only just begun to improve.

Goldman Sachs also acknowledges that Europe lags behind the U.S. in data center construction and cutting-edge model research and development, which may affect long-term productivity and growth. However, the firm also believes that Europe’s lack of deep involvement in AI trading provides a certain buffer for local markets when facing risks of overheating valuations in AI or competition from China.

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