In the first six weeks of 2025, European stock markets posted their biggest advance over Wall Street in 10 years on record. However, despite increased investor hopes that they will overcome years of underperformance, long-term structural problems may prevent this, writes Reuters.
Taking advantage of the significant difference in asset valuations, investors are actively investing in European equities, expecting that this time growth will be more sustainable, rather than repeat the fate of previous short-term rallies. In January, capital inflows into European funds reached the second highest level in 25 years. According to Generali Investments strategist Michele Morganti, quoted by the portal, a more modest increase in the profits of U.S. IT giants and the possible strengthening of stimulus measures in Kit may contribute to the overflow of investment in Europe.
Nevertheless, Europe still faces serious structural challenges. Among the key ones are energy dependence, imperfect governance, fragmented energy and financial markets, low population growth rates and insufficient investment in the technology sector, the portal states.
