What a shift from savings into equities would actually change

European households hold a materially larger share of their financial assets in deposits than their US counterparts, and a materially smaller share in equities. The observation is well established. What follows from it is usually asserted rather than worked through.

The argument as usually made

A reallocation from deposits into equities would introduce a large, price- insensitive, domestic buyer into a market that has lacked one. Demand rises against slow-moving supply, and valuations re-rate toward US levels.

The mechanism is real. The size of the effect is where the argument tends to overreach.

Three things that limit it

Where the money goes. Household equity allocation typically arrives through funds, and funds allocate globally. A reallocation out of European deposits is not necessarily a reallocation into European equities.

What supply does. Higher valuations bring issuance. Buybacks slow. The float is not fixed, and a re-rating is partly absorbed by companies responding to it.

How long it takes. Reallocations of this kind, where they have happened, have taken a decade or more. Effects spread over a decade are difficult to distinguish from everything else happening over the same decade.

What it would change

The more defensible version of the argument is narrower: a sustained domestic bid would reduce the discount attached to smaller domestic businesses, where the absence of a natural buyer is most acute and where global funds are least present. That is a specific, testable claim about a segment, not a claim about the index.