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Seeking Delta
Seeking Delta
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World Market Valuation Heat Map

January 27, 2011

Based on data provided by Aswath Damodaran, Professor of Finance at NYU, I have created the following world market valuation heat map. Big thanks to Prof. Damodaran for making this data available to the public.

The data is as of January 2011 and includes all publicly traded US firms and all those with a market cap greater than $5 million for non-US firms. Value Line is the source for US data and a combination of Bloomberg and Capital IQ for non-US data.

Countries where data was available for thirty or more firms were ranked by equally weighting Price/Earning, Price/Book and Price/Sales ratios. More specifically, for those wonkishly inclined, the z-score for each metric was used in order in properly weight the possibility of a similar relative metric rank but a significant absolute difference. The color scale runs from dark green (cheapest) to dark red (most expensive).

According to this valuation method Japan and developed Europe appear to be the cheapest markets (no big surprise) with Asia and the big commodity players (Australia and Canada) being the most expensive. The US comes out in about the middle; 36th out of 71 countries ranked. See map below.

chart?chf=bg,s,EAF7FE&chs=440x220&cht=t&

World Valuation Heat Map



Unfortunately, I was unable to make the chart larger to view detail but an expanded view of each region can be seen below.

chart?chf=bg,s,EAF7FE&chs=440x220&cht=t&

Africa



chart?chf=bg,s,EAF7FE&chs=440x220&cht=t&

Asia



chart?chf=bg,s,EAF7FE&chs=440x220&cht=t&

Europe



chart?chf=bg,s,EAF7FE&chs=440x220&cht=t&

Middle East



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South America



Using broad sub groupings Japan is the cheapest broad market (not country) with Africa and the Middle East being the most expensive. See table below.

global-valuation_region.png?w=482&h=268

Global Valuation by Region



I plan on following this up with more detail into individual country markets so stay tuned.

About the author:

Seeking Delta
Intellectually curious, Sr. Financial Analyst for a Fortune 500 firm. Level III CFA candidate, MBA with a passion for investing. My investing style is value / contrarian. I also blog at seekingdelta.wordpress.com where my posts primarily revolve around macro economic analysis, investor sentiment, broad based valuation metrics or anything else investing related that captures my attention. Visit my blog at Seeking Delta.

Visit Seeking Delta's Website


Rating: 4.6/5 (23 votes)

Comments

energywonk
Energywonk - 6 years ago    Report SPAM
very interesting as an australian and keen commodity investor i tend to agree with the valuations on canada and australia. good job
superguru
Superguru - 6 years ago    Report SPAM
awesome job, of the markets I follow, last 4 months I have felt that India, China and Australia is over valued. I sold mostly out of India Mutual Fund end of last year. I stay away from China agreeing with Chanos and Diane Chiu.

Only place I found some bargains was in mainland Europe.

I was getting interested in Brazil but never got time to research.

Now I have the data to back me up.

Seeking Delta - it will be great if you can make this monthly feature similar to Jacob's excellent monthly US market valuations.

paulwitt
Paulwitt - 6 years ago    Report SPAM
Very nice work and useful. I think it is especially useful when investing in country specific etf's and mutual funds. With that said though, I think for the individual stock picker, I believe there are good buys in every country. I've heard people say there are no good bargains, but if I recall, Warren Buffett knew every stock on the exchanges from A-Z. And now, globally, there are more stocks than ever to research.

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