The selling wave that engulfed the world’s equity markets on the last day of February and reverberated for several sessions beyond was traumatic, but not so as to carve deep losses across the board so far this year.
Looking at 2007 returns through March 8 reveals some red, but much of it has been limited to the riskier slices of the globe’s equity markets. Emerging markets in particular are off 2.5% so far this year through yesterday, with European emerging leading the slide with a 7.7% loss as of March 8. By and large, however, the world’s markets so far this year are mostly flat, give or take, according to S&P/Citigroup Global Equity Indices.
How did the markets around the world stack up on a valuation basis at last month’s end? Let’s start with P/E ratios. Emerging markets were the least expensive, on a relative basis, posting a trailing P/E of 13.8 as of February 28. That’s down slightly from 14.5 on December 31, 2006. The most expensive regions are in the 17-plus range. Japan, in fact, was nearing a 22 P/E as last month closed. (P/E and all fundamental data below based on
S&P/Citigroup Global Equity Indices, as of Feb. 28, 2007.)

On a price-to-cashflow basis, Latin America continues to be the value leader, as it was at the end of 2006. As of February 28, Latin America’s P/CF was 5.5. On the opposite extreme: emerging markets in general at a comparably pricy 14.2.
When it comes to return on equity, the Mideast/Africa region remains in the lead position, posting a 19.6 ROE at last month’s close. Japan, meanwhile, continues to hold the low end at 9.5.
Dividend-oriented investors will be encouraged to learn that yields were up a bit at the end of February relative to 2006’s close. In relative terms, Europe was the last month’s winner, with a 3.0% yield as Japan dragged along at the low end with a meager 1.1% dividend yield as of February 28.


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