Research Update

We have updated our research website with the data from the 30th of April 2018. The most interesting results are summarized below.

Stock Market Valuation

Based on a universe of 6,500 companies, each month, we calculate fundamental valuation ratios for several countries and regions. 

Ranking of regions based on CAPE: Emerging Markets attractive, Europe neutral, North America expensive:

  • Eastern Europe: 9.3
  • Emerging Markets: 17.3
  • Asia (EM): 18.6
  • Europe (DM): 19.1
  • America (EM): 19.5
  • World: 24.0
  • Developed Markets: 25.1
  • United States: 29.8
     

Attractive valuations and above average momentum can be found in South Korea and Italy

Most attractive countries based on:

CAPE PB Dividend yield
Russia (6.4)
Greece (0.7)
Czech (5.5%)
Czech (10.0)          
Russia (0.9)          
Russia (5.1%)
Turkey (10.4)
China (1.0)
Australia (4.4%)

Based on historical data, stock market's Fair Value can be estimated. Illustrated by the example of Germany, investors should buy in phases of low valuations and sell when valuations are high.

After years of price gains, the German stock market now trades slightly above its Fair Value. Especially countries in Southern or Eastern Europe as well as in Asia offer higher potential.

Interactive map and table with current stock market valuation ratios 

Stock Market Expectations

We calculate the returns equity investors can expect over the next 10-15 years in several regions. The forecasts are based on the current CAPE and PB.

What long-term returns can investors expect (real):

RegionStock Market Expectation
World AC5.4% p.a.
United States3.2% p.a.
Europe6.7% p.a.
Emerging Markets7.2% p.a.

 

Eastern Europe appears particularly promising with an expected return of 11.2%

Countries with highest expected returns: Russia (13.1%), Turkey (10.1%) and Czech (9.5%)

Countries with lowest expected returns: Denmark (2.8%), United States (3.2%), Ireland (3.9%)

In this chart, the return potential has been forecasted for 20 countries with the highest market-capitalization-weight

 Detailed Stock Market Expectations for several countries and regions

Value-Cycle

Based on the Fama and French HML-factors (High Minus Low), we calculate value premiums for the most important regions.

Fama and French HML value premiums over the last 12 months for the most important regions: value premium remains positive in Europe, rising premium worldwide and in the US

RegionPremium
Global-5.9% p.a.
United States-6.6% p.a.
Europe+2.4% p.a.
Japan-11.3% p.a.

 

Interactive Value-Cycle with historical observations

StarCapital - Norbert Keimling

Contact Us

For queries or additional information please contact:


Norbert Keimling
Head of StarCapital Research
info(at)starcapital.de