European stocks see long-term inflows, Goldman Sachs believes there is still room for growth.


Recently, there has been a significant increase in long-term capital inflows into European stock markets. Goldman Sachs has provided an analysis on this matter.

Goldman Sachs strategists indicate that recent capital inflows into European stock markets have increased, marking a reversal of nearly two years of continuous selling since Russia's invasion of Ukraine.

Although capital flows are typically related to economic cycles and expectations, this time the inflows lag behind the improvement in survey data in both timing and scale. Additionally, there has been an increase in inflows to cyclical stocks, Goldman notes.

Strategists wrote that this observation further suggests that the turning point in the European economy is driving capital inflows, a trend that is also evident in the United States.

They added that in recent years, Europe has been the region with the least long-term capital inflows, with almost zero cumulative net inflows since 2020. They believe there is still room for capital inflows to increase.

According to Goldman Sachs data, domestic investors who had been withdrawing from European equities in recent years have now returned, and international investors have also increased their holdings.

The capital flows of American investors have recently improved, showing a strong correlation with rising confidence and expectations. They have been quicker to purchase European stocks than domestic investors.

However, Goldman notes that balanced and multi-asset funds, which were major buyers due to low interest rates from 2011 to 2022, are unlikely to return.

Meanwhile, corporate buyers have become new key players in the region, making purchases through buybacks. Strategists expect this trend to continue, driven by strong profits in the energy and banking sectors.

In recent years, European households have been significant savers, preferring cash, deposits, and bonds over stocks. The Goldman Sachs team believes that when interest rates are lowered, combined with the currently observed moderate cyclical upswing, these households' interest in stocks will increase.

Strategists added that the issue of Europe's lack of investment and growth is gaining more political and policy attention, with increasing discussions on how to more actively utilize European savings to address this.



Risk Warning and Disclaimer

The market carries risks, and investment should be cautious. This article does not constitute personal investment advice and has not taken into account individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular circumstances. Investing based on this is at one's own responsibility.

The End



Investing refers to the act of allocating funds or other resources into certain assets or projects with the expectation of obtaining future returns or benefits. The primary aim of investing is usually to enhance asset value, achieve financial goals, preserve and grow value, or accomplish a specific objective.

Related News

Risk Warning

TraderKnows is a financial media platform, with information displayed coming from public networks or uploaded by users. TraderKnows does not endorse any trading platform or variety. We bear no responsibility for any trading disputes or losses arising from the use of this information. Please be aware that displayed information may be delayed, and users should independently verify it to ensure its accuracy.


Contact Us

Social Media