Equity market breadth nearing, creating IR opportunities for those international equities that think proactively in 2026
Over the last few years, we’ve seen little to no market breadth beyond the top seven largest securities. However, as we cross the halfway point of 2025, we may finally be seeing small embers that could break the malaise for non-mega caps. Those embers have come from an IPO market that is clearly building momentum, and just surpassed 2024’s total, suggesting investors are finally starting to open their risk profiles. Should this environment build momentum, we believe we will witness a cyclical shift that changes the balance of favor back to international (non-U.S.) equities, after more than a decade of U.S.-listed company market dominance. Whether this reversal will prove durable remains to be seen, but history suggests that extraordinary streaks do not continue forever. As Herbert Stein famously put it: “If something cannot go on forever, it will stop.”
Given the performance gap, combined with the pressures on active portfolio managers to keep up, we believe that non-U. S. companies who trade on U.S. exchanges need to be prepared to proactively increase their IR engagement in 2026. This includes properly telling your investment story, as well as proactive targeting of U.S. and global equity investors.
Cycles Still Matter
Equity markets, even when stretched, remain cyclical. Capital flows follow performance, and over time they rebalance as relative returns change. The cycle of U.S. stock outperformance has now extended well beyond historical norms. By late 2024, the gap between U.S. and EAFE (developed international) equity performance reached extreme levels. See the chart below:
- The U.S. has now outperformed non-U.S. developed markets for more than 175 consecutive months, compared to a historical average of roughly 48 months and a prior peak of 74 months.
- The performance gap between the S&P 500 and the MSCI EAFE index sits roughly two to three standard deviations beyond the long-term mean.
Put simply, we are far beyond “normal.”
Are We at a Turning Point?
Cycles only become obvious in hindsight, but today’s backdrop suggests conditions are ripe for change. Several forces point to a potential inflection:
- Political uncertainty: The U.S. government’s unorthodox trade policies may produce significant unintentional consequences that ripple though global markets.
- Currency dynamics: A weakening U.S. dollar, driven by a combination of changes in trade policy, interest rate expectations, and a growing fiscal deficit could bolster international equity returns.
These dynamics reinforce the notion that the U.S. cannot indefinitely remain the sole beneficiary of global capital flows.
Why Being “Cheap” Isn’t Enough
That said, valuation alone will not drive the rotation. International equities may appear inexpensive relative to U.S. stocks, but “cheap” is not a compelling investment thesis. Investors tend to reward growth, profitability, and credible strategies for value creation. U.S. equities have commanded global capital in recent years because they delivered, in aggregate, higher earnings growth and stronger profitability. For non-U.S. companies, the challenge is clear: they must articulate not only that they are undervalued, but why and when performance will improve.
The Call to Action for Non-U.S. Companies
Against this backdrop, international companies that trade on U.S. exchanges cannot afford to be passive if they are to capture the opportunity and effectively compete for capital in the U.S. markets. If we are indeed entering a new cycle of international equity performance, it is critical for non-U.S. issuers to proactively engage, particularly with U.S. investors. This requires:
- Refining the investment narrative: Emphasize core tenets of your strategy, growth drivers, profitability prospects, and catalysts for a re-rating.
- Proactively target U.S.-based investors: As active institutional investment managers reassess portfolio allocations, foreign companies must develop and execute a ‘Wall Street’ Engagement Strategy to identify, engage, and onboard this pool of U.S.-based capital.
- Maintain momentum in the investor relations program: In addition to targeting and engaging investors, keep a clear pulse on how your company’s narrative is resonating, refine your messages as needed, and evolve your supporting investor collateral and messaging at all points.
At Alpha, we specialize in helping companies rise to these occasions. Our expertise lies in elevating investor relations strategies, crafting compelling narratives and supporting collateral, and ensuring corporate issuers capture the attention – and capital – of long-term investors.
