We have updated our research website with the data from July 2019. 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.
- Assuming a fair CAPE of 18.3 and a fair PB of 1.8, currently 18 out of 40 stock markets are trading below this fair value.
- Ranking of regions based on PB: Emerging Markets and Europe (esp. Germany) ahead, United States well behind:
- Eastern Europe: 1.0
- Germany: 1.6
- Emerging Markets: 1.7
- Europe (DM): 1.8
- Asia (EM): 1.8
- Africa: 1.9
- America (EM): 1.9
- World: 2.1
- Developed Markets: 2.1
- United States: 3.4
- Most attractive countries based on:
|Russia (7.3)||Greece (0.8)||Russia (4.0)||Russia (6.9%)|
|Turkey (8.3)||Korea (South) (0.9)||Hungary (4.9)||Czech (5.7%)|
|Czech (10.2)||Russia (0.9)||Turkey (4.9)||Finland (5.1%)|
Interactive Map: 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 based on fundamental valuation (in real terms):
- World AC: 5.6% p.a.
- Europe: 6.9% p.a.
- Germany: 7,5% p.a.
- United States: 3.0% p.a.
- Emerging Markets: 7.9% p.a.
- Developed Countries with highest expected returns: Korea (South) (10.8%), Singapore (9.6%), Austria (8.8%)
- Developed Countries with lowest expected returns: United States (3.0%), Denmark (3.2%), Ireland (3.9%)
Details: Stock Market Expectations
Based on the Fama and French HML-factors (High Minus Low), we calculate value premiums for the most important regions.
- Longest period of losses in history: value stocks disappointed compared to growth stocks for years. This applies not only to the US market, but to all major regions:
- Fama and French HML value premiums over the last 5 years for the most important regions:
- Global: -5.2% p.a.
- United States: -5.1% p.a.
- Europe: -4.7% p.a.
- Japan: -3.7% p.a.