Are there any bargains left in the world’s equity markets? Or has the bull market of the last few years dispensed with such alluring concepts as relative value?
Easy to ask, tough to answer. Beauty, as always, is in the eye of the beholder when it comes to putting a fair value on stocks. The challenge is even tougher when you consider that valuing securities isn’t an end unto itself, but a means of divining the future path of stocks.
The assumption by many is that low valuations equals above average returns going forward. There is, in fact, quite a bit of truth to that notion, albeit one that can be risky when dissecting individual companies. Relative valuation offers a bit more comfort when comparing equity markets among the planet’s various regions. Regional equity markets, after all, don’t go out of business or get sideswiped by the ill-advised actions of a rogue CFO.
With that in mind, we dive into the performance statistics from the S&P/Citigroup Global Equity Indices, with the results listed in the table immediately below. With the usual caveats lurking, we nevertheless turn up a few intriguing profiles of what’s going on in equity markets around the world. But first, let’s go to the horse race, looking at total returns so far this year, through July 12, 2006 (see the table below).
