JPMorgan's Michael Cembalest said non-US equities trade at roughly a 25% forward P/E discount to US stocks, near record lows, but attractive valuations have failed to redirect flows away from US markets.Summary:JPMorgan's Michael Cembalest said the forward price-to-earnings ratio of MSCI World ex-US stocks relative to US equities stood near 75%, implying international shares trade at approximately a 25% discount to US counterparts, per JPMorgan Asset ManagementThe valuation gap has widened steadily over the past decade, falling from around parity in the mid-2000s to near record lows, driven by US large-cap technology outperformance and stronger earnings growth, per JPMorganNon-US stocks briefly traded at a premium to US equities during parts of the 2000s before the relative valuation compressed consistently in favour of US markets, per Bloomberg and JPMorgan Asset Management dataDespite the discount, international equities have struggled to attract meaningful flows away from US markets, where AI-driven earnings enthusiasm has continued to support higher multiples, per JPMorganNon-US equities are trading at one of their steepest valuation discounts to American stocks on record, but the gap has so far failed to redirect the flow of global capital away from US markets, JPMorgan Asset Management's Michael Cembalest said.The forward price-to-earnings ratio of MSCI World ex-US stocks relative to US equities stands near 75%, implying international shares are priced at roughly a 25% discount to their US counterparts. Cembalest described the discount as the equivalent of a bug zapper for global asset allocators, drawing attention without reliably pulling capital in.The valuation gap has widened consistently over the past decade as US markets benefited from the dominance of large technology companies and a sustained earnings growth advantage. The relative measure stood near parity in the mid-2000s and at points briefly exceeded 100%, meaning non-US stocks commanded a premium. That relationship has since inverted and compressed to near record lows, based on Bloomberg and JPMorgan Asset Management data.The persistence of the gap despite its scale reflects the gravitational pull of US earnings momentum and AI-driven multiple expansion, forces that have proven strong enough to keep allocators anchored to American equities even as the valuation case for diversification abroad has rarely looked more straightforward on paper. This article was written by Eamonn Sheridan at investinglive.com.