Global Valuation Updates!

Quarterly CAPE Ratio Updates!  

After another monster year of performance in 2017, many countries are still quite cheap.  But some countries are expensive too…let’s go right to the stats!

Median CAPE Ratio: 19
25% most expensive: 27 (U.S. in this bucket)
25% cheapest 13

Average of Foreign Developed 21
Average of Foreign Emerging 17

We’ve mentioned this a lot in the past 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 -6 or 2.

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.

The cheap stuff is still dominated by Europe…but some other names have been creeping in over the past year…

Here it is in Excel too.

MSCI Investable Market Indices

CAPE CAPD CAPCF CAPB Average Rank Dev or Emerging Real Drawdown %
Czech Republic 9.9 12.3 4.6 1.3 3 E -38.70
Portugal 14.1 18.6 4.6 1.2 4 D -55.43
Russia 6.5 31.1 4.1 0.9 5 E -74.33
Spain 13.5 19.5 6.3 1.4 6 D -18.27
Poland 12.4 27.6 5.8 1.4 6 E -28.99
Italy 17.8 27.1 5.3 1.0 8 D -40.18
Brazil 14.3 28.5 8.7 1.6 10 E -29.67
Egypt 14.5 29.4 7.9 1.7 11 E -53.97
Greece -6.2 8.2 1.9 0.3 12 E -96.44
Singapore 14.4 29.8 11.1 1.5 13 D -4.58
Israel 14.8 35.8 9.9 1.6 14 D -19.21
Norway 15.9 31.4 7.5 1.8 14 D -1.33
U.K. 15.6 30.0 9.2 2.0 15 D 0.00
Colombia 16.3 30.0 11.3 1.4 15 E -28.33
Turkey 12.2 41.9 9.4 1.7 16 E -36.40
Hungary 15.2 60.6 7.0 1.7 18 E -16.43
Austria 19.8 47.3 7.6 1.4 18 D -33.46
Korea 15.6 91.9 8.4 1.5 19 D -1.87
Australia 18.4 24.3 12.4 2.0 20 D -0.36
Malaysia 17.1 36.4 11.3 1.9 21 E -2.70
France 21.0 37.6 10.6 1.9 22 D -3.31
Chile 18.4 40.8 10.7 1.9 22 E -20.29
Canada 20.8 38.3 10.5 2.0 23 D -0.04
Hong Kong 18.1 42.4 13.7 1.6 24 D 0.00
Germany 20.2 43.7 9.9 2.1 24 D -3.94
Taiwan 21.8 34.5 10.8 2.2 25 E -5.03
Finland 21.6 30.7 12.0 2.4 26 D -49.93
China 17.0 53.0 11.9 2.2 26 E -12.37
New Zealand 23.9 30.0 12.4 2.4 28 D -0.12
South Africa 19.8 38.5 13.4 2.7 28 E -2.78
Mexico 21.4 59.2 10.6 2.6 30 E -5.26
Japan 27.7 74.6 11.3 1.8 31 D -0.68
Sweden 21.7 40.4 15.2 2.8 32 D -5.39
Belgium 25.9 40.4 14.2 2.2 32 D -6.17
Thailand 22.1 45.8 13.3 2.9 33 E -8.28
Indonesia 20.7 50.9 13.9 3.4 34 E -5.45
Netherlands 23.9 49.3 14.1 2.5 34 D -2.76
Peru 19.6 55.9 18.8 3.3 35 E -17.68
Switzerland 24.9 41.8 17.7 3.0 36 D -0.55
Philippines 22.3 65.3 14.5 2.9 37 E -28.79
Ireland 37.0 63.8 16.0 2.2 38 D -29.59
India 22.6 95.3 15.3 3.3 40 E -19.38
U.S. 30.6 77.3 17.6 3.8 42 D -0.54
Denmark 35.8 94.7 21.2 4.3 43 D -2.39

SECTORS

S&P 500 Current P/E
Energy 19.6
Telecom 22.1
Utilities 23.1
Staples 24.4
Industrials 27.2
Financials 28.2
Health Care 30.6
IT 33.9
Materials 34.4
Discretionary 36.8

Good investing,
Meb Faber
theideafarm.com