Bloomberg Surveillance · Tuesday, September 15, 2026
Marina Zavalac, Chief Euro Equity Strategist at Morgan Stanley, stated that European equities are currently trading at a 20% discount to US equities on a like-for-like basis, excluding the 'Magnificent Seven' tech giants. While this discount is less extreme than the 40% seen earlier in the year, she believes it represents a significant opportunity as Europe breaks out of a long-term downtrend in its valuation relative to the US.
“Now it's about 20% like-for-like discount, sector neutral, taking out Mag 7. So more like-for-like comparison, 20%. At the peak, it was 40%. So it's not as extreme.”
“But I think the interesting thing is if you look at that chart, the discount rate on a long-term history is January 1st this year, we broke out. So we broke out of a 10-year downtrend. Nobody ever wanted to talk about Europe's cheapness before. Now, it's the first question you ask me.”
“We broke out. And history suggests when we break out like this, we will keep going to single-digit levels of discount versus the US.”