Top Stories

Updated Global CAPE Shows US Expensive, Greece Incredibly Cheap

Even before the Greek stock market started tanking this week (it’s down another 7.35% today), it was one of the cheapest markets on the planet by nearly every fundamental measure, according to StarCapital’s global stock valuations (/H/T Meb Faber) updated at the end of November. Hungary was slightly cheaper by price-to-sales, but Greece had a lower CAPE, PE, PB, and price-to-cash flow than any other country or region (the ratings don’t include frontier markets). The US had the second highest CAPE at 27.9, with only Denmark being even more expensive with a CAPE of 31.6.

Updated Global CAPE Shows US Expensive, Greece Incredibly Cheap

It’s striking that Europe generally appears to be pretty cheap right now, at least as measured by CAPE,

Greece and other cheapest markets by CAPE, PE, and PB

By most measures Russia is the second cheapest market after Greece, which makes sense considering the impact that falling oil prices are expected to have on its economy. After that CAPE, PE, and PB measures start to diverge with only Brazil, Norway, and South Korea showing up among the fifteen cheapest markets by all three measures.

Now that the Greek stock market has fallen by 20%, the gap between it and other developed and emerging markets is even more pronounced. Identifying Greek companies that have ready access to foreign markets could be a good strategy for finding stocks being unfairly punished by political uncertainty.

Global CAPE Greece  fundamental valuations cheapest 1214

The most expensive markets by CAPE, PE, and PB

Hungary, cheap by other measures, is trading at 132x PE according to StarCapital’s research, meaning that earnings and book value are somehow out of whack. The US is fairly expensive by all three measures, rating in the top 15 most expensive markets. Even if you don’t think that US equity valuations have pulled too far ahead of earnings, it’s hard to argue that it isn’t at least fully valued. North America and Developed Markets generally also appear on all three lists, but the US has a big weight in both measures so that’s not a surprise. The only other countries to join the US in all three top 15 lists are Switzerland and Mexico.

Global CAPE Greece fundamental valuations 1214