Research Update

We have updated our research website with the data from the 29th of March 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. 

In the past, stock markets have been valued with an average CAPE of 18.3 and PB of 1.8. Currently, only 15 out of 40 countries are traded below these historical averages. In Russia, the discounts are extraordinary while the biggest overvaluations are seen in the United States, India and Switzerland:

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

  • Eastern Europe: 9.3
  • Emerging Markets: 17.2
  • Europe (DM): 18.3
  • Asia (EM): 18.6
  • America (EM): 19.1
  • World: 23.6
  • Developed Markets: 24.7
  • United States: 29.8
     

Attractive valuations and above average momentum can be found in Russia, China, Czech and Portugal

Most attractive countries based on:

CAPE PB Dividend yield
 Russia (6.3)
 Greece (0.7)
 Czech (5.5%)
 Czech (10.0)          
 Russia (0.9)          
 Russia (4.8%)
 Turkey (11.5)
 China (1.0)
 Australia (4.5%)

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, p.a.)?

RegionStock Market Expectation
World AC5.6% p.a.
US3.3% p.a.
Europe6.9% 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 (13.2%), Poland (9.7%) and Czech (9.5%)

Countries with lowest expected returns: Denmark (2.8%), United States (3.3%), Ireland (4.2%)

 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 is still rising in Europe, worldwide high value potential

RegionPremium
Global-7.1% p.a.
US-9.6% p.a.
Europe+3.7% p.a.
Japan-10.5% 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