Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Gold, Silver and Copper - The 3 Metallic Amigos and Their Messages - 5th Dec 20
TESCO Christmas Decorations Festive Shop 2020 - How to Beat the Coronavirus Economic Depression - 5th Dec 20
Premium Bonds Good, Bad or Ugly Investment? Here's What Return (Prize Wins) to Expect - 5th Dec 20
How to accomplish a technical analysis with the Forex - 5th Dec 20
What is life insurance and what are the benefits of having it? - 5th Dec 20
Pre-COVID US Economy Wasn’t All That Great Either - 4th Dec 20
Bitcoin Breath Taking Surge - Crypto Trading Event - 4th Dec 20
Platinum Begins A New Rally – Gold & Silver Will Follow - 4th Dec 20
Don't Let the Silver (and Gold) Bull Shake You Off! - 4th Dec 20
Stronger Risk Appetite Sends Gold below $1,800 - 4th Dec 20
A new “miracle compound” is set to take over the biotech market - 4th Dec 20
Eiro-group Review –The power of trading education - 4th Dec 20
Early Investors set to win big as FDA fast-tracks this ancient medicine - 3rd Dec 20
New PC System Switch On, Where's Windows 10 Licence Key? Overclockers UK OEM Review (5) - 3rd Dec 20
Poundland Budget Christmas Decorations Shopping 2020 to Beat the Corona Economic Depression - 3rd Dec 20
What is the right type of insurance for you, and how do you find it? - 3rd Dec 20
What Are the 3 Stocks That Will Benefit from Covid-19? - 3rd Dec 20
Gold & the USDX: Correlations - 2nd Dec 20
How An Ancient Medicine Is Taking On The $16 Trillion Pharmaceutical Industry - 2nd Dec 20
Amazon Black Friday vs Prime Day vs Cyber Monday, Which are Real or Fake Sales - 1st Dec 20
The No.1 Biotech Stock for 2021 - 1st Dec 20
Stocks Bears Last Chance Before Market Rally To SPX 4200 In 2021 - 1st Dec 20
Globalists Poised for a “Great Reset” – Any Role for Gold? - 1st Dec 20
How to Get FREE REAL Christmas Tree 2020! Easy DIY Money Saving - 1st Dec 20
The Truth About “6G” - 30th Nov 20
Ancient Aztec Secret Could Lead To A $6.9 Billion Biotech Breakthrough - 30th Nov 20
AMD Ryzen Zen 3 NO UK MSRP Stock - 5600x, 5800x, 5900x 5950x Selling at DOUBLE FAKE MSRP Prices - 29th Nov 20
Stock Market Short-term Decision Time - 29th Nov 20
Look at These 2 Big Warning Signs for the U.S. Economy - 29th Nov 20
Dow Stock Market Short-term and Long-term Trend Analysis - 28th Nov 20
How To Spot The End Of An Excess Market Trend Phase – Part II - 28th Nov 20
BLOCKCHAIN INVESTMENT PRIMER - 28th Nov 20
The Gold Stocks Correction is Maturing - 28th Nov 20
Biden and Yellen Pushed Gold Price Down to $1,800 - 28th Nov 20
Sheffield Christmas Lights 2020 - Peace Gardens vs 2019 and 2018 - 28th Nov 20

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

P/E Ratio Global Stock Markets Analysis and Technical Outlook - Nov 07

Stock-Markets / Stock Market Valuations Nov 18, 2007 - 10:30 PM GMT

By: Nadeem_Walayat

Stock-Markets Best Financial Markets Analysis ArticleThe Price / Earnings Ratio has long been recognized as one of the most useful financial indicators for valuing both individual stocks and stock markets. However as with individual stocks, it can be misleading if not also taking into account growth prospects for a particular economy. One of the primary indicators of growth is a countries real GDP, and as with an individual stock analysis, it is the consistency of trend that is important so as to avoid one year growth spurts.


Therefore the following table evaluates current country main indices P/E Ratios against GDP growth trends for 2008, as an indicator of prospects for future stock price appreciation in terms of relative valuations.

Analysis suggests the following fundamental picture based on earnings and trend adjusted growth for 2008.

Cheap markets
Turkey, South Korea, Russia, India

Fair Priced
Hong Kong, Canada, Australia, and Brazil

Expensive Markets
China, US, Europe

Basket Case
Japan

Conclusion :
If you don't have any or very little exposure to Turkey, South Korea, Russia and India then you should seriously think about adjusting your portfolios in their favour.

Hong Kong, Canada, Australia, and Brazil are good long-term prospects, but they are not cheap, therefore a reaction or correction would present a buying opportunity there.

China, UK, USA. Suggests being underweight in domestic stocks. China, this market is not cheap, I pulled out of this months ago and await a serious pull back before contemplating re-entering, were talking 30%+ Though there are plenty of better opportunities even after a pull back of 30%.

I just cannot fathom why so many people are obsessed with piling into Japan ?

Immediate Term Technical Outlook

My technical take for a month now has been for Western stock markets to outperform the asian stock markets, to decouple so to speak.( 21 Oct 2007) , ( 04 Nov 2007 ), ( 12 Nov 2007) This is being borne out by actual price movements. I.e. This week US stocks closed marginally higher with the S&P up 0.35%. Whilst China and Hong Kong stocks fell, with the Hang Seng down 4% and the Shanghai Index down 1%. I anticipate this trend to continue into the New Year, as the Western markets are still gearing up towards a strong end of year rally.

Banking Sector

Having watched the banking sector crash towards multi-year lows, I am now finally contemplating entering the market to pick up some cheap bank stocks for the long-run. My reasoning is mostly technical, but also supported by the assumption that the financial and banking stocks world over have lost trillions in market capitalization. That's against a worst case scenario of some $400 billions of bad debt losses over 2 years, as against $45 billion of actually reported bad debt provisions to date. Check by the Market Oracle site for an article to be published Monday morning - Banking Stocks - Is It Time To Buy?

Yours, thinking about adding to Indian and Turkish stocks for the long-run on Monday, (since I am already fully loaded with Russia and South Korea), and feeling the urge to buy certain banks.

By Nadeem Walayat
Copyright (c) 2005-07
Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of analysing and trading the financial markets and is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 100 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Dave Kolb
21 Nov 07, 02:20
Global STOCK MARKET VALUATIONS

I do not understand your above chart.

You say India is a good deal yet its PE is almost as high as Japan which you say is bad yet Japan has a lot higher GDP growth.

Can you please explain?

Thanks,

Dave


Nadeem Walayat
21 Nov 07, 02:21
Country Ranking of Global Stock Markets

Hi Dave

The Red Bars are the COUNTRY RANKING - Which is the PE adjusted for GDP growth trend.

Indias GDP is far, far higher than Japans.

Regards.

Nadeem Walayat,


Rajan Bade
31 Dec 07, 09:18
P/E analysis

Dear Nadeem,

Really this is a fantastic analysis. Thanks for this wonderful article. Can you include concept or calulation of adjusting P/E for GDP growth trend so that we can understand the thing in deep.

Regards,

Rajan Bade


pitt
06 Jan 08, 12:19
average p/e

Hi,

great analysis !

where can I find p/e averages for certain indices ?

(say, the Malaysian KLSE..)

Thanks

Pitt


rajendra jain
03 Sep 08, 12:07
what similarity between china and india in gdp rate ?

actually you are not able to explain whole thing... its little bit complicated.. can u explain your chart properly and explain it deeply ??

thanks

regards

Rajendra Jain


raj
22 Jan 11, 13:52
Global stock markets update

Hi Nadeem,

Could we have an update on this article to see what the markets look like now?

Thanks

Raj


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules