As this week’s chart shows, the relative price-to-book (p/b) ratio of European equities versus US equities is over one standard deviation below its long-run average, one of the largest differences on record.
As the headlines and earnings reports come in through the next few months, it is important for investors to understand why the earnings estimates are where they are, and what might drive them higher or lower. For now, European equities look attractive on a few measures compared to other equity markets.
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Nandini Ramakrishnan is global market strategist of JP Morgan Asset Management
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