Secret outperformer: Dispelling the 'myths' about an unloved stock market — SkimNews
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- Goldman Sachs published an August 10 note arguing that since the start of 2025, the Stoxx 600 has outperformed the S&P 500 'despite both the tariff shock and an energy supply crisis,' with European banks outperforming the Magnificent 7 since 2022.
- Stoxx 600 is up 10% year-to-date in 2026, slightly behind the S&P 500's 13.5% return over the same period.
- Goldman Sachs challenged the view that Chinese competition is a major headwind for Europe, noting autos — the most exposed sector — make up just 1% of Europe's market cap, with financials, pharma, tech, energy, utilities, telecoms, and aerospace/defense not especially vulnerable to low-cost Chinese imports.
- Stoxx Autos index is down 16% year-to-date, with Stellantis falling 51.9% and Volkswagen AG dropping 27.6% amid a years-long structural crisis of slowing EV demand, lost market share to Chinese rivals, and higher borrowing costs.
- BNP Paribas Asset Management's Sophie Huynh told CNBC Europe is 'more likely to be an AI beneficiary rather than a developer,' with autos among deep-value sectors whose upside is currently ignored by the market consensus.
- Goldman Sachs acknowledged Europe is behind on data center rollouts and frontier AI modeling, but argued that being behind on the AI trade may serve as a hedge for investors worried about China competition risks.
Why it matters: Goldman's thesis reframes European equities from laggard to quiet outperformer — a 10% YTD Stoxx 600 gain and outperformance versus the S&P 500 since 2025 challenges the U.S.-exceptionalism consensus that has dominated 2026 flows. But the case leans on shrinking autos to just 1% of Europe's market cap, even as Stellantis collapses 51.9% and the Stoxx Autos index drops 16% YTD. Diversification-seeking investors get a genuine hedge against AI-concentration risk; anyone looking for broad European recovery still faces a structurally wounded sector Goldman quietly sidesteps.
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