Markets have priced in a lot of upside potential for the U.S. but not yet for Europe, BlackRock's vice chairman told CNBC on Wednesday.
"U.S. markets are more richly priced than European markets….there is also the risk around trade policy… The cycle has been going on longer in the U.S. - the U.S. was the leader, Europe is kicking in later in this reflation cycle," posited Philipp Hildebrand, speaking at the IIF G20 summit in Frankfurt.
"I think there is a global reflation dynamic. It has synchronicity as a central feature – Japan, Europe and the U.S. - and when that happens we tend to underestimate the momentum. So I think there is great potential for Europe provided the politics remain centered," he further explained.
While acknowledging the threat that European political dynamics could derail his outlook given the upcoming spate of elections in the Netherlands, France and Germany this year, Hildebrand maintained that there was a "good chance" centrist parties would retain the balance of power.
Indeed, he believes that a victory for frontrunner French presidential candidate Emmanuel Macron could see the critically important rebuilding of the country's relationship with Germany.
"One of the critical weaknesses in my mind is the weakness of France as a reliable partner to Germany in all issues pertaining to the euro and European policies," Hildebrand opined.
"Europe cannot function in my mind in the long-term unless you have a really strong relationship at the centre between France and Germany," he added.