FVMR Snapshot
Malaysia Currently Does Not Look Very Attractive
Malaysia has low ROE relative to the world and looks expensive on a PB basis given the low ROE. Earnings and price momentum are both low. Good news is that risk is low.
Read MoreEmerging Markets–More Attractive in 2017
Global Equity FVMR Snapshot: Looking at ROE/PB, we can see that Emerging Markets are more attractive at 2017 8.2% ROE/PB than Developed Markets at 5.9%. Emerging Markets trade at a PEG ratio of only 0.8 (a rule of thumb is that below 1.0 is cheap).
Read MoreMassive Profitability in Expensive Indian Consumer Staples
India’s ROE is expected at 16% in 2017, well above the World average. Consumer Staples is the most profitable sector by far, with an ROE of 34%! However, it’s the most expensive sector in India even when taking the high ROE into account.
Read MoreWatch Out for the Korea Discount
Korea is a special market when it comes to its valuation and profitability relative to other markets. There is something called the “Korea Discount”. Only three sectors trade above book value on 17CE*: Health Care, Consumer Staples and Info Tech.
Read MoreChinese Stocks Aren’t Cheap, Chinese Banks Are
The PE for the Chinese market appears to be cheap relative to the World average. However, if you look at it sector by sector, you’ll find that there are only three sectors trading below the world average on 2016CE* PE. Financials is the reason that China appears cheap on PE, the sector is very cheap and constitutes about one-third of the Chinese market capitalization.
Read MoreStrong Earnings Momentum in Materials
Materials look attractive as earnings growth is expected to be solid in both 2016 and 2017. Consensus expectations are EPS growth of 11.5% in 2016 and 16.1% in 2017 for the Materials sector.
Heath Care is the only sector that delivers an ROE of above 20% globally.
Read MoreEmerging Markets Currently Offer More Bang for the Buck
Looking at ROE/PB, we then can see that Emerging Markets at 2016 7.4% ROE/PB are more attractive than Developed Markets at 5.7%. Even though Developed Markets have higher ROE, it’s less attractive on ROE/PB. Most ROE for the price-to-book you pay you’ll find in Emerging Europe where you get 13% ROE for every unit of PB.
Read MoreGlobal Equity FVMR Snapshot – August 2016
Developed Markets are only more profitable in terms of ROE than Emerging Markets due to the US. Even though the US has higher ROE, it’s less attractive on ROE/PB relative to both Emerging Markets and Developed non-US.
Read MoreGlobal Sectors FVMR Snapshot – August 2016
Health Care delivers the highest ROE among sectors globally—above 20%. Energy is still most expensive on PE due to low earnings. Earnings in the World are expected to see double-digit growth in 2017.
Read MoreUS Equity FVMR Snapshot – August 2016
US’ ROE is about 3% above the World and the two consumer sectors have the highest profitability. Gearing in the US has increased since 2015 and the highest gearing is in Telecom, Utilities, and Consumer Discretionary.
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