Where Do Equity Valuations Stand Today?

There seems to be several compelling reasons at the moment to mine developed market Asia for new equity investment ideas. Earlier this week we noted that the changing liquidity environment could move investors’ regional equity preference from North America to Asia. In this post we are evaluating current equity valuations and the most obvious conclusion to draw is that DM Asia equity valuations are much cheaper than DM Americas and DM EMEA valuations. Two quick notes: 1) all data is on an equal-weighted, USD basis 2) all charts below can be enlarged by clicking on the chart.

Across the four major valuation ratios (P/CF, P/BV/, P/E, P/S), DM Asia is the cheapest region in the developed world. Asian equities really stand out when we look at price to book value and price to sales ratios. In both of these cases, equity valuations are roughly half as much in DM Asia as they are in DM Americas. Additionally, DM EMEA falls in the middle across all metrics but tends to have valuation levels closer to DM Americas rather than DM Asia.

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