EU/US equity ratio hits 38-year low

If there is value in European equities then nobody is picking it up, but a great opportunity will certainly arise, says Riccardo Ronco, Head of Technical Analysis at Aviate Global in London.

Ronco notes that the ratio between European and US equities (MSCI EU/US in USD) is at a 38-year low, suggesting there is significant “value” in Europe. However, Ronco says “for now, all we can do is to keep underweight EU equities. Only the bullish breakout of the 2008 resistance trendline on this ratio will suggest a strategic change of allocation.”

See chart.