AXA Investment Managers says that European equity markets continued their rally in October, rising 3.9 percent in the UK. Accordingly, the risk premium fell for European equities by 10bps, to 7 percent. Nevertheless, Europe remains the most attractive region in terms of valuation.
The valuation gap between German and French equities has widened further (to 29bps), with the risk premium on German equities falling by 13bps, to 6.53 percent, and France falling only 7bps, to 6.82 percent. The equity risk premium differential between France and the UK remains unchanged over the period under review, at 4bps, as both equity risk premiums dropped by 15bps, to 6.78 percent, for the UK.