European capital markets (especially equities) undervalued due to Greece turmoil

We think European equities undervalued amid long lasting dramatic Greece turmoil.

Euro area growth looks solid as healthy economic numbers posted with inflation bottoming.

The EFSF (European Financial Stability Facility) bond yield increased to 0.18% in June from 0.11% in May of 2015.

The GDP in the Euro area expanded 0.40% in the Q1 of 2015 over the past period.

Unemployment status in the Euro area remained unchanged at 11.10% in May of 2015 from 11.10 % in April of 2015.

In a way, European equities have been positioning underweight amid Greek fears.

Upbeat Stoxx 600 positioned better than Europe MF beta.

Global equity MF positioning in Europe: 1 mln correlation of excess returns.

Hedging long equities: Rolling risk-adjusted returns of buying peripheral equity against peripheral debt

Euro area equities have traded at a discount to the US, but the relative discount fell toward 2012 levels. Peripheral P/E multiples running well below Germany and the US.