Global stock market valuations separate the wheat from the chaff
“All flights to Johannesburg have been delayed indefinitely due to inclement weather”. Those were the awful words that have just been uttered from the cockpit of a stationary aircraft supposed to fly from Cape Town to Johannesburg en route to New York. It is anybody’s guess whether I will still make it to the Big Apple in time for a long-awaited lunch with Barry Ritholtz on Friday.
But the delay at least gives me an opportunity to catch up on some reading and blog a few paragraphs. And also to place side-bets with fellow passengers on the South African Springboks winning the Rugby World Cup on Saturday. Didn’t I told you this when you could still get 3:1 odds instead of the Boks now being odds-on favorite – see “We are the champions …”
I post a global stock market performance round-up on a monthly basis – see “Are global markets on steroids” (September 30, 2007)” as an example. The dilemma with focusing only on historical returns, however, is that they at best represent a rear-view mirror assessment of future investment potential.
A far superior approach is to combine the performance ranking tables (and price charts) with a measure of valuation. And this is where I find Fullermoney’s global price/earnings ratio (PER) and dividend yield (DY) tables particularly useful. These are still historical figures, but nevertheless serve as a very useful guide to where over- and under-valued situations are most apparent. (Yes, I realize that it is much better to use prospective PERs and DYs, but I unfortunately do not have access to that data for dozens of countries around the globe.)
In order to view the PERs and DYs as at both September 5 and October 8, please click on the thumbnails below.
Ranking of global price-earnings ratios
Ranking of global dividend yields
In future I will incorporate Fullermoney’s PER and DY rankings in my monthly review of global stock market returns to better serve our needs to seek out the next global hot spot.
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