Marcel Stötzel of Fidelity European Trust (FEV ) highlights the emergence of a potentially exciting new trend: the outperformance of European stock markets over the US.

This is the second video excerpt from our virtual event with Fidelity European last month. You can watch the previous highlight, or, if those whet your appetite, see the whole Big Broadcast.

Can’t watch now? Read the transcript

Marcel Stötzel:

This was the greatest trade there ever was almost. Long US, short Europe. So, this is the MSI Europe relative to the S&P 500. What a great trade. You could have come up in almost any point over that time period over the last 20 years or so and you would have made money.

If you’ve got a magnifying glass somewhere, you can see Europe is staging a valiant recovery over there, right at the end. If you believe that European companies are essentially global, in the same way as US companies. Obviously, US companies are slightly more US-focused, European companies are slightly, but not to the extent that this chart would lead you to believe.

We think it only needs a small spark for that recovery and we’ve already seen this play out in some ways already. So, you look at some of the M&A that’s happened. You’ve had a good number of deals, some of which we’ve seen. Philip Morris buying Swedish Match and the like, where you’ve got American companies that can buy often, dollar-based companies or largely dollar-valued companies for a bargain because the currency has depreciated, the market has sold off. You get the double whammy and we think that there’s more of that to come.

The same way was we had Americans coming to Bond Street or Champs-Elysees to buy Apple products, luxury goods, etcetera, cheaper over the last summer. We think investors, at some point, and by investors, we mean investors like us. We mean investors in private equity. We mean investors as in other companies just buying M&A. We think that should pick up quite materially at some point. We don’t know when, obviously, but a spark from the base, we think. Probably won’t recover entirely the trend line, but there’s a good amount to go back.