Europe's Investment Gap Shows U.S. and Asia Market Dominance

European investors remain heavily domestic, underweighting U.S. and Asian markets that now dominate global equity. U.S. stocks account for about 63% of MSCI world indices, Asia 16% and Europe less than 14%. The tech sector, which drives most of that weighting, makes up over 50% of U.S. and emerging‑market valuations but only around 10% in Europe. Valuation multiples have shifted: the U.S. price‑earnings ratio fell from 23‑x to 20‑x this year, while Europe stayed near 15‑x, giving Europe a premium over the United States for the first time in two decades. Growth forecasts for 2026‑2028 project annual earnings growth of roughly 20% in the U.S., 35% in emerging Asia and 12% in Europe.

A parallel study of EU corporations finds a move toward "rentier capitalism": one in six firms now derives more than 10% of profits from financial activities rather than production. Dividend payouts and share‑buybacks have risen from 27% to 68% of net earnings since 2000, while corporate tax cuts from an average 35% in 1995 to 21% in 2023 have not translated into higher productive investment. The report calls for Europe to shift from extracting value to creating it.