Global Valuation Updates!

Quarterly CAPE Ratio Updates

Quite a year so far. Below I thought we’d report the summary CAPEs with year end 2019, end of Q1, end of Q2, and end of Q3 (current).

Median CAPE Ratio: 17, 12, 13, 15 (now)
25% cheapest: 12, 9, 10, 10
25% most expensive: 28, 22, 24, 27

Average of Foreign Developed: 22, 17, 18, 20
Average of Foreign Emerging 16, 11, 12, 13

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 other metrics just not on CAPE.

Here it is in Excel too.

CAPE CAPD CAPCF CAPB Average Rank Dev or Emerging Real Drawdown %
Czech Republic 7.7 9.1 3.3 0.9 3 E -55.31
Russia 6.4 23.1 4 0.8 5 E -67.42
Poland 8.6 20.6 3.9 0.9 5 E -52.62
Spain 11 14.8 4.9 1 7 D -41.67
Colombia 10.1 19.5 6.2 0.9 8 E -46.96
Austria 10.6 27 4.4 0.8 8 D -59.14
Turkey 7.4 25.6 5.8 1 9 E -56.92
Chile 10.5 21.8 5.9 1 9 E -53.45
Egypt 10.6 24.1 5.7 1.1 11 E -70.43
Portugal 15.5 17.4 4.5 1.1 12 D -59.15
Greece -1.8 15.3 2.8 0.3 12 E -97.3
Singapore 11 21.2 8.6 1 13 D -19.71
U.K. 12.5 22 7.1 1.5 14 D -22.72
Italy 16.9 25.8 4.8 0.9 15 D -46.8
Norway 14.3 25 6.5 1.5 16 D -16.45
Hungary 11 43.6 4.5 1.2 17 E -35.98
Thailand 12.5 25.7 7.5 1.6 17 E -35.83
Hong Kong 13.1 31.9 9.7 1.2 21 D -17.79
Indonesia 12.4 29.4 8.2 1.9 21 E -36.24
Malaysia 14.6 28.8 9.4 1.5 21 E -10.31
Mexico 15 37.9 7.2 1.7 23 E -30.99
Korea 13.7 74.3 7.3 1.3 23 D -5.93
Brazil 15.7 29 9.2 1.7 24 E -20.58
Philippines 13.3 41.6 8.6 1.7 24 E -53.76
France 17.9 32.4 9.2 1.6 25 D -19.36
Peru 12 32.5 11.5 1.8 25 E -41.03
South Africa 15.3 28.1 10.1 1.9 25 E -24.04
Australia 16.8 23 11.4 1.9 26 D -16.1
Israel 15.3 40 9.9 1.6 27 D -14.25
Germany 17.2 38.1 8.5 1.8 27 D -10.26
Belgium 18.3 29.6 10.6 1.7 28 D -25.88
Japan 19.3 57.6 9.4 1.5 29 D -9.47
Canada 20.2 35.6 10.4 1.9 31 D -8.01
China 15.7 51.4 11.7 2 33 E -5.66
Finland 23.4 30.5 13.2 2.4 33 D -42.18
Taiwan 22.3 37.6 12.1 2.4 34 E -3.59
New Zealand 29.2 37.5 15.7 2.9 37 D -3.69
Sweden 22.1 42.4 15.9 2.9 38 D -1.32
Netherlands 24.6 51.7 15.3 2.5 38 D -6.26
India 21.9 82.3 14 2.9 38 E -25.15
Switzerland 25.1 41.4 18.6 3.2 39 D -6.27
Ireland 35.6 74.1 16.8 2.3 40 D -25.59
U.S. 30.5 75.7 18.5 4.1 42 D -5.78
Denmark 37 89.9 24 5.1 44 D -0.41
US Global
Communication Services 19.8 15.6
Discretionary 36.3 18.7
Energy 11.7 31.6
Financials 15.5 12.7
Health Care 32.6 25.2
Industrials 22.2 18.8
IT 46.9 23.3
Materials 24.6 18.7
Staples 23.9 21.1
Utilities 24.2 16.8

Good investing,
Meb Faber
theideafarm.com