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 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.
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
Discover our European investment capabilities
Fixed income
A diverse range of Euro fixed income strategies, including Euro high yield bonds which pursue equity-like returns and offer a reliable source of income.
Equity
Growth-driven thematic ideas which seize opportunities in areas from defence, energy, digital infrastructure to critical supply chains.
Private assets
Co-investment is another growth market, providing a wider set of opportunities beyond public equities.
Related insights
[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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