Unlocking Global Equity Value: A Strategic Shift in a Post-U.S.-Dominance Era

The global equity landscape is undergoing a seismic shift. For decades, U.S. markets dominated investor attention, driven by relentless innovation, fiscal stimulus, and a concentration of global tech giants. However, 2025 has marked a pivotal inflection point. Non-U.S. equities have outperformed their American counterparts, with the MSCI EAFE Index rising 12.1% and the MSCI EM Index gaining 12.2% in Q2 2025 alone, outpacing the S&P 500's 10.9% return. This trend is not a fleeting correction but a structural realignment, fueled by valuation gaps, policy divergence, and technological innovation. For disciplined, valuation-driven investors, the opportunity to capitalize on undervalued global equities has never been more compelling.

The Five Catalysts Reshaping Global Equities

1. AI Democratization in Asia: Chinese firms like Deepseek, Alibaba, and Tencent have defied U.S. sanctions to develop energy-efficient generative AI systems. These advancements, coupled with lower power consumption, position Asia as a hub for AI infrastructure. Companies such as Taiwan Semiconductor (TSM) and ASML (ASML) are already reaping the rewards of this renaissance.
2. Fiscal Divergence: While U.S. fiscal stimulus wanes, Europe's $1.5 trillion infrastructure and defense spending plans are injecting momentum into non-U.S. markets. Germany's strategic investments, in particular, are creating a fertile ground for industrial and tech growth.
3. Tariff Resilience: U.S. tariffs have disproportionately hurt domestic firms reliant on global supply chains. International companies, however, have shown agility in shifting production, gaining a cost advantage. This dynamic is particularly evident in the auto and manufacturing sectors.
4. Corporate Governance Reforms: Japan and South Korea's shareholder return initiatives have boosted price-to-book ratios and dividend yields, making Asian equities more attractive. These reforms are now spreading across the region, enhancing long-term value.
5. Historic Valuation Gaps: The MSCI ACWI ex USA Index trades at a 35% discount to the S&P 500, one of the widest spreads in decades. This discount, combined with improving fundamentals, creates a powerful catalyst for outperformance.

The Janus Henderson Approach: Conviction-Driven Discipline

Amid this shifting landscape, Janus Henderson's conviction-driven, multi-dimensional strategy stands out. The firm's approach combines rigorous valuation analysis with a focus on macroeconomic tailwinds, positioning it to exploit the current environment. By prioritizing undervalued sectors in non-U.S. markets—such as AI infrastructure, energy transition, and industrial innovation—Janus Henderson aligns with the five catalysts outlined above.

For instance, the firm's emphasis on semiconductor and AI infrastructure stocks (e.g., TSM, ASML) leverages China's AI breakthroughs while mitigating geopolitical risks. Similarly, its exposure to European defense and infrastructure plays capitalizes on Germany's fiscal stimulus. This disciplined, bottom-up approach ensures that investments are not only aligned with macro trends but also rigorously vetted for intrinsic value.

Strategic Implications for Investors

The case for non-U.S. equities is no longer speculative—it is data-driven. The MSCI EAFE's forward P/E of 14.7 versus the S&P 500's 22.1 highlights a stark valuation asymmetry. Moreover, the Euro's 8% appreciation against the U.S. Dollar in Q2 2025 amplified returns for international investors, further enhancing the appeal of global diversification.

However, success requires discipline. Investors must avoid chasing short-term hype and instead focus on companies with durable competitive advantages and strong balance sheets. For example, while AI-driven tech firms in Asia offer high growth potential, their valuations must be scrutinized against cash flow and profitability metrics. Similarly, European equities benefit from fiscal tailwinds but remain vulnerable to trade policy volatility.

Conclusion: A New Era of Global Opportunity

The post-U.S.-dominance era is not a zero-sum game. It is an opportunity to rebalance portfolios toward markets with superior fundamentals, governance, and growth trajectories. Janus Henderson's strategy exemplifies how a disciplined, valuation-focused approach can harness these dynamics. As non-U.S. markets continue to gain strategic appeal, investors who act with conviction and rigor will be well-positioned to outperform in this evolving landscape.

For those seeking to capitalize on undervalued global equities, the time to act is now. The convergence of AI innovation, fiscal policy shifts, and attractive valuations creates a rare window for long-term gains. By adopting a multi-dimensional, conviction-driven framework, investors can navigate the complexities of this new era and unlock value in markets poised for sustained outperformance.