This episode explores the recent surge in international stock market performance and the factors contributing to this shift. Against the backdrop of prolonged US market dominance, the discussion highlights the correction in mega-cap tech stocks as an initial trigger, prompting investors to seek alternative investment avenues. More significantly, the conversation delves into specific catalysts, such as increased defense spending in Europe (particularly Germany) and infrastructure investments, driven partly by reactions to previous US policies. For instance, the panelists discuss the consolidation within the European financial sector, aiming to compete with US giants, and the potential impact of a resolution to the war in Ukraine. The interviewee, a portfolio manager with over two decades of experience, emphasizes the role of these catalysts in driving earnings growth, finally complementing the already attractive valuations of international equities. He also points to the potential for a weaker US dollar, historically beneficial for non-US stocks, as another contributing factor. Ultimately, this discussion underscores the importance of considering both top-down country analysis and bottom-up company selection when investing in international markets, and the potential for significant returns in undervalued sectors.
