Skepticism is again proving unhealthy for European stock bears who see a monster behind every door.

They were punished anew on Monday. French stocks surged to an eight-year peak after centrist Emmanuel Macron won the first round of the country’s presidential elections. That sparked regional benchmarks to soar to their highest levels since 2015.

Again and again, politics are cited as a reason to avoid European equities, and again and again — from the U.S. presidential election to votes in Turkey and the Netherlands — the warnings result in investors kicking themselves for being overly cautious.

“Investors have looked at politics this year and used that as an excuse not to allocate to Europe,” Stephen Macklow-Smith, who helps manage about $2.2 billion of European equities for JPMorgan Asset Management in London, said in a telephone interview. “Assuming Emmanuel Macron wins in the second round, people will have no more excuses.”

Fund managers in recent months had cited a possible victory for right-wing, anti-euro Marine Le Pen in the French vote as the most pressing risk causing them to hold back on investing in European stocks. Opinion polls, which fairly closely predicted the outcome of Sunday’s vote, indicate Macron will win the final vote by a landslide.

That’s prompting investors to shift their focus to the region’s improving economic fundamentals. Macklow-Smith is among a slew of investors pointing to improving corporate profits and a sounder economic backdrop as factors that will lend further support to Europe’s stock market.

For a look at the euro area’s budding recovery, click here.

Deutsche Bank AG’s Deutsche Asset Management moved quickly, as it upgraded European equities to overweight on Monday.

Invesco Ltd., which manages about $835 billion, is especially positive on banks, arguing that a benign French election result could encourage the European Central Bank to turn less accommodative at some point this year.

“I would expect to see a resurgence of Europe as an investment area,” Matthew Perowne, a Henley-on-Thames, U.K.-based fund manager at the firm, said by phone, referring to equities. “If we have a favorable round two, which is our base case, then I suspect at some point in the second half, rates will become less negative, which is a big tailwind for bank earnings.”

Monday’s bullishness harks back to the few voices in January who predicted European stocks might be the “pain trade” of the new year. Stephane Barbier de la Serre, a strategist at Makor Capital Markets in Geneva, said three months ago that “risks that populist candidates take power are very slim, so people are getting it wrong.”

Cyclical Stocks

A broad consensus among investors and analysts is that cyclical stocks have the most to gain now that a Le Pen presidency seems less likely, meaning her threat to stability in the euro area is reduced. Cyclicals including lenders, materials and automakers — those most tied to the economy — led gains among industry groups in the Stoxx Europe 600 Index Monday.

A purchasing managers’ index last week showed private-sector activity in the euro area growing at the fastest pace in six years, while German business sentiment climbed to the highest level in almost six years in April in a sign that the momentum in Europe’s largest economy is set to continue.

Still, European funds have a long way to go to see a reversal of the $113 billion that investors yanked from them last year, according to EPFR Global data.

Strategists at Bank of America Merrill Lynch predicted an increase in inflows if a runoff between between Le Pen and Communist-backed Jean-Luc Melenchon was avoided. The return of international investors will be key to reversing last year’s trend, Perowne said.

“We had said for a while that Europe looked attractive as an investment destination, but had been holding back from further investment owing to political concerns,” John Wyn-Evans, head of investment strategy at Investec Wealth & Investment, wrote in a note Monday. “Europe has the potential for further recovery.”