Research Update

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:
  • CAPE PB PC Div. Yield
    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
 

Value-Cycle

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.
StarCapital - Norbert Keimling

Contact Us

For queries or additional information please contact:


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