Euro-zone equities have staged something of a revival so far in the second half of 2013, returning over 10% and outperforming US equities. Relatively low valuations have probably played an important role in fuelling the growing demand for equities in an economy that is finally showing signs of life. After all, the cyclically-adjusted price earnings ratio of the non-financial sector is below 15, some 9 points less than in the US. The last time the gap exceeded 10 points was over a decade ago, following the bursting of the dot com bubble.
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