Eurozone Outperformance: What the Recent Gains in CAC 40 and IBEX 15 Signal for European Equities

The Eurozone's equity markets have long been viewed through the lens of macroeconomic volatility, but recent performance in the CAC 40 and IBEX 15 indices suggests a compelling case for strategic rotation into undervalued European assets. As global investors recalibrate portfolios amid shifting trade dynamics and divergent monetary policies, these indices offer a unique blend of growth potential and valuation appeal.

Performance: CAC 40 and IBEX 15 Outpace Broader Europe

In Q3 2025, the CAC 40 advanced 3.8%, aligning with broader European trends but lagging behind the DAX's 4.67% surge, according to an Impaakt analysis. However, the IBEX 15 index, representing Spain's largest firms, demonstrated exceptional resilience. IBEX Limited (IBEX), a key component of the index, reported record quarterly revenue of $140.7 million-a 11% year-over-year increase-driven by expansion into high-margin offshore regions and AI-driven services, according to its earnings call transcript. Following its earnings release, IBEX's stock surged 6.86% in after-hours trading, signaling robust investor confidence, according to Yahoo Finance. This outperformance contrasts with the FTSE 100's 3.04% gain, which, while positive, reflects a more cautious stance amid lingering UK economic uncertainties according to the Impaakt analysis.

Valuation: CAC 40 and IBEX 15 Trade at a Discount

Valuation metrics further underscore the case for rotation. The CAC 40's forward P/E ratio stands at 13.52 as of January 1, 2025, according to SiblisResearch, while the IBEX 15's forward P/E is 13.66 as of July 23, 2025, according to MacroTrends. Both indices trade at a discount to the DAX's 15.78 and the Eurozone's broader 16.76 P/E ratio, per World PE Ratio. This undervaluation is particularly striking given the CAC 40's inclusion of high-yield stocks like TotalEnergies (6.15% dividend yield) and Engie (5.4%), which provide income stability in a rising-rate environment, according to DividendPedia.

The IBEX 15's valuation appeal is amplified by its exposure to Spain's services sector, which accounts for 68.5% of the country's GDP, according to FocusEconomics. Despite a contractionary manufacturing PMI of 46.5 in Q3 2025, according to TradingEconomics, the index's focus on tourism and digital services positions it to benefit from post-pandemic recovery and AI-driven productivity gains. Meanwhile, the DAX's industrial-heavy composition-anchored by automotive and chemical firms-faces near-term headwinds from global supply chain adjustments and energy transition costs, according to JustETF.

Strategic Rotation: Why Now?

The case for rotation hinges on three pillars: valuation arbitrage, sectoral diversification, and macroeconomic resilience. First, the CAC 40 and IBEX 15 trade at a 12–15% discount to the DAX and FTSE 100, offering higher risk-adjusted returns for investors seeking value. Second, their sectoral mix-spanning energy, services, and technology-provides a hedge against the industrial cyclicality of the DAX and the UK's services-driven but debt-laden FTSE. Third, Spain's projected GDP growth of 2.4% in 2025, according to the OECD, and France's stable 3.8% Q3 gain (per the Impaakt analysis) suggest these economies are better positioned to weather global slowdowns than their German or UK counterparts.

Risks and Considerations

Critics may cite Spain's 11.6% unemployment rate and the CAC 40's exposure to energy volatility as red flags. However, the IBEX 15's recent share repurchase programs and AI-driven growth initiatives (reported by Yahoo Finance) demonstrate proactive management, while the CAC 40's 3.19% dividend yield offers downside protection, according to SiblisResearch's global dividend data. Investors should also monitor the ECB's tightening cycle, which could pressure smaller Eurozone markets.

Conclusion

The CAC 40 and IBEX 15 are not merely beneficiaries of short-term momentum-they represent a structural re-rating of Eurozone equities. With valuations at multi-year lows and growth drivers in place, these indices present a compelling case for investors seeking to capitalize on Europe's next phase of recovery. As the DAX and FTSE 100 face near-term headwinds, strategic rotation into the CAC 40 and IBEX 15 could unlock alpha while diversifying exposure to global macro risks.