A recent breakthrough in trade talks between the US and Canada has alleviated tensions over a Digital Services Tax (DST) dispute, sparking a surge in investment into Europe’s resilient sectors. The resolution of the tax dispute, which will see Canada abandon its DST and collect only $4.2 billion from US tech giants, marks a turning point for global trade.
Investment analysts are now focusing on European equity fund inflows, with February 2025 seeing €23.07 billion in allocations to global equities – a significant shift away from the US market. The EU’s Clean Industrial Deal (CID) and Hydrogen Bank are driving this trend, offering steadier returns than the US market.
Europe’s investment surge is centered around three key areas:
1. Hydrogen: The EU’s Green Industrial Play – With €992 million awarded to 15 projects in May 2025, targeting 2.2 million tonnes of renewable hydrogen by 2030.
2. Defense: A Geopolitical Hedge – The EU’s Critical Raw Materials Act and defense spending reforms are shielding industries from global shocks.
3. Tech & Infrastructure: The AI-Driven Pivot – ATON Green Storage and Micro Systemation are benefiting from EU subsidies.
Key investment strategies include:
* Overweighting Hydrogen Plays
* Investing in Tech Infrastructure
* Allocating to ETFs, such as Vanguard FTSE Europe ETF (VEUR)
* Hedging with inflation-linked bonds and gold ETFs
However, risks include policy delays and geopolitical volatility.
Source: https://www.ainvest.com/news/capital-shifts-atlantic-navigating-trade-talks-europe-emerging-opportunities-2506