Global Valuation Updates!

Quarterly CAPE Ratio Updates

Well the first quarter of the decade certainly altered the landscape…

Median CAPE Ratio: 12 (was 17)
25% cheapest 9 (was 12)
25% most expensive: 22 (was 28 (U.S. in this bucket))

Average of Foreign Developed: 17 (was 22)
Average of Foreign Emerging 11 (was 16)

We’ve mentioned this note in every update but bears repeating.  We use the MSCI Investable Market Indices below, but MSCI also calculates their Standard Indices too.  IMI includes more companies and in general is more representative of the entire market.  It really makes no difference for any of the countries except the very smallest ones, such as Greece and Egypt.  For both series the CAPE ratios are almost always near identical, with one glaring exception – again, Greece, which depending on the series you use has a CAPE ratio of -2 or 4.

So, this is one reason we have always used a valuation composite across the variables below.  If one is giving a screwy result, or perhaps a market has a structural bias to one variable, we want to average it out.  So, in this case Greece is cheapest on CAPD, CAPB, and CAPCF, just not on CAPE.

We’ll also be adding CAPS (sales) to the update this summer!

The cheap stuff is still dominated by Europe…but everything got a lot cheaper in Q1…

Here it is in Excel too.

CAPE CAPD CAPCF CAPB Average Rank Dev or Emerging Real Drawdown %
Czech Republic 7.1 8.3 3.1 0.8 2 E -58.28
Poland 7.4 17.7 3.4 0.8 4 E -58.39
Russia 5.9 22.7 3.7 0.8 6 E -70.69
Spain 10.6 14.4 4.7 0.9 7 D -42.49
Turkey 6.4 21.6 5 0.9 8 E -62.75
Egypt 9.5 20.7 5 1 9 E -73.84
Colombia 10 19.3 6.2 0.9 9 E -49.65
Austria 10.3 25 4.2 0.8 10 D -61.2
Chile 10.2 21.6 5.8 1 11 E -54.98
Greece -1.8 11.8 2.1 0.2 12 E -97.65
Portugal 14.6 17.1 4.4 1.1 13 D -60.14
Italy 15 22.6 4.3 0.8 14 D -52.93
Singapore 10.6 20.5 8.2 1 14 D -25.5
Norway 12.2 21.6 5.6 1.3 16 D -28.7
Brazil 11.9 22.4 7.1 1.3 17 E -39.24
U.K. 12.1 21.2 6.8 1.4 17 D -26.75
Korea 10.2 57.9 5.5 1 18 D -29.33
Hungary 11.5 44 4.7 1.3 19 E -34.11
Malaysia 12 24.2 7.8 1.3 19 E -26.41
Thailand 11.7 24.6 7.1 1.5 20 E -40.5
Hong Kong 12 29.1 8.9 1.1 22 D -27.21
Germany 13.7 30.2 6.9 1.4 23 D -30.22
Indonesia 11.9 28.7 7.9 1.8 24 E -40.03
South Africa 12.8 23.5 8.4 1.6 24 E -37.88
Australia 14.4 19.7 9.8 1.6 25 D -29.22
Mexico 13.8 36.1 6.7 1.6 26 E -36.24
France 16.4 29 8.4 1.4 26 D -28.03
Philippines 12.2 37.7 8 1.6 27 E -58.02
Israel 13.1 33.9 8.6 1.4 27 D -25.54
Peru 10.8 31.2 10.3 1.7 27 E -48.19
Canada 16.7 29.7 8.5 1.5 28 D -25.59
Belgium 16.9 27.3 9.8 1.5 29 D -32.81
Japan 17.3 51.3 8.2 1.3 30 D -22.94
China 12.2 39.5 9 1.6 30 E -28.27
Taiwan 17.3 29.2 9.3 1.8 32 E -19.99
Finland 18.5 23.7 10.4 1.9 32 D -55.63
Sweden 17.7 32.4 12.7 2.3 37 D -23.98
India 16.2 62.2 10.5 2.2 37 E -44.07
Netherlands 20.4 42.4 12.6 2.1 38 D -24.49
New Zealand 25.5 32.2 13.5 2.5 38 D -17.81
Switzerland 23.1 38.1 17.2 2.9 40 D -16.85
Ireland 34.6 58.5 13.5 1.8 40 D -42.02
U.S. 23.7 59.5 14.3 3.1 42 D -25.03
Denmark 30.1 73.1 19.3 4.1 44 D -16.28

Good investing,
Meb Faber
theideafarm.com