International Investing: Exploring Global Opportunities for Growth

The investment landscape is experiencing a seismic shift, with international markets emerging as powerful engines for growth.

After over a decade of US dominance, 2025 marked a dramatic reversal, as global equities surged ahead by significant margins.

unprecedented opportunities for growth now beckon beyond domestic borders, inviting investors to rethink their strategies.

This article explores the data, trends, and practical insights to help you seize these global opportunities.

We will delve into performance metrics, valuation advantages, economic catalysts, and risk management.

By understanding these dynamics, you can position your portfolio for potential gains in a changing world.

The 2025 Performance Reversal: A New Era Begins

International stocks delivered exceptional returns in 2025, outpacing US indices by wide margins.

This shift ended a long period of underperformance, signaling a potential inflection point.

non-US stocks returned 30% for the year, demonstrating robust growth across regions.

Key data points highlight this reversal:

International equities outperformed US stocks by roughly 17 percentage points in 2025.
Gains were broad-based, spanning Europe, Japan, and emerging markets.
This performance contrasts sharply with the previous decade of US leadership.

Such trends suggest that global diversification may now offer enhanced rewards.

2026 Growth Forecasts and Economic Outlook

Looking ahead, forecasts for 2026 indicate continued momentum in international markets.

Global growth is projected to accelerate, with some regions poised for strong expansion.

emerging markets see 17% earnings growth in USD terms from 2024 to 2026.

This outpaces US projections, highlighting the potential for higher returns abroad.

Key growth projections include:

Global growth estimated at 2.8% by Goldman Sachs, above consensus forecasts.
US growth at 2.6%, while international markets may see accelerating earnings.
J.P. Morgan forecasts double-digit gains for global equities in 2026.

These outlooks underscore the importance of incorporating international assets into portfolios.

Valuation Advantages: The Discount Opportunity

One of the most compelling reasons to invest internationally is valuation.

Non-US stocks are trading at substantial discounts compared to US counterparts.

approximately 35% cheaper based on P/E ratios even after 2025 gains.

This discount presents a buying opportunity for value-oriented investors.

For example, European banks trade at 9-10 times P/E, significantly lower than US banks.

The table below summarizes key valuation comparisons:

Such disparities suggest potential for price appreciation as markets rebalance.

Key Economic Drivers and Policy Catalysts

Several factors are fueling international growth, from fiscal stimulus to monetary policy.

Europe, in particular, is witnessing transformative changes that could boost economies.

Germany passed a $1.3 trillion investment package focusing on infrastructure and green energy.

This is the most significant fiscal spending since reunification, likely spurring demand.

Additional catalysts include:

European Central Bank rate cuts of 2.35% from 2024 to 2025.
NATO defense spending pledges ramping up to 4% of GDP by 2035.
Global dollar diversification trends reducing reliance on US assets.

These policies are shifting Europe from austerity to a growth mindset, enhancing investment appeal.

Regional and Sectoral Opportunities for Investors

Specific regions and sectors offer targeted growth potential in the global landscape.

Europe is described as poised for solid growth, with Germany's GDP expected to accelerate.

financials and industrials well-positioned to benefit from economic cycles.

Defense contractors, such as Safran and BAE Systems, may gain from NATO spending.

Other promising areas include:

Japan, Korea, and China, where corporate governance initiatives are gaining traction.
Emerging markets deepening regional trade links and strengthening institutions.
Cement sectors in Europe, attractive due to demand expansion and consolidation.

By focusing on these niches, investors can capture alpha in diverse markets.

Structural Shifts and Long-Term Trends

The current shift is not just cyclical but structural, with lasting implications.

International markets are improving in corporate fundamentals and policy momentum.

narrowing growth differentials relative to the US support this change.

Lagged effects of overseas rate cuts should kick in during 2026, boosting economies.

Cheaper borrowing costs encourage business investment and consumer spending globally.

This structural evolution means valuation discounts may narrow, offering sustained returns.

Risk Factors and How to Mitigate Them

International investing carries unique risks that require careful management.

Developing economies face headwinds, with growth slowing to around 4.2% in 2026.

currency fluctuations and geopolitical risk are key considerations.

Other challenges include differences in accounting standards and foreign taxes.

To mitigate these, consider the following strategies:

Diversify across countries to spread risk and capture growth wherever it occurs.
Use investment vehicles like ETFs and mutual funds for liquidity and ease.
Stay informed on global events and adjust allocations as needed.

Balancing optimism with caution is essential for long-term success.