Europe is hot, according to S&P/Citigroup Global Equity Indices.
For 2006, European Emerging equities lead the horse race through yesterday, delivering a 34.5% total return, S&P/Citigroup reports. Europe overall hasn’t done all that bad either, posting a 22.2% return this year. But as the chart below reveals, stellar returns haven’t been standard around the globe. Even so, the bottom performer (Mid-east and Africa) managed to eke out a 1.6% rise.

Past performance is no guarantee of future returns, as they say, although it does provide some perspective on what may come next. Perspective, such as it is, seems like a timely subject now that the summer is unofficially over and thoughts turn again to work. And just in time to greet the returning hordes to their desks comes a fresh forecast from the OECD, which has published a new outlook on the G7 economies. The outfit opines that GDP growth for the biggest economies will remain steady in the third quarter compared to the second, although signs of slowing will become more evident, if only slightly, once the fourth quarter arrives.
With that in mind, where does value reside in the world equity markets? As always, coming up with an answer is complicated and therefore risky endeavor. But a 1,000-mile journey starts with the first step. With that in mind, we begin by looking at the globe’s equities by dividend yield. On that score, Asia Pacific ex-Japan offers the best relative payout at around 3.3%, or nearly twice as high as U.S. equities.

There is, of course, more than one way to define value. As such, here’s a look at three more fundamental rankings of world equity markets (return on equity, price-to-cash flow and trailing 12-month price-to-equity ratios), all courtesy of data from S&P/Citigroup Global Indices.