Buffett Indicator: Belgium Stock Market Valuations and Expected Future Returns

Updated at Sun, 24 Jan 2021 20:30:05 -0600
Country: Belgium (updated daily) check out Global Overview for detailed methodology.

The Stock Market is Modestly Undervalued.

Ratio of total market cap over GDP: Recent 20 Year Maximum - 138.19%; Recent 20 Year Minimum - 46.04%; current - 73.63%
Expected future annual return: 5.6%

ETF Used for dividend yield: EWK (Yield=1.76%)
Market Index used: BEL20
Current Annual GDP: $574 billion US dollars or 473 in billions of national currency (GDP in Local Current Prices Annual Growth=2.26%)
Data since year 1991

Belgium Historical GDP Growth

Historical GDP of Belgium in billions of national currency. The GDP in local current prices has grown at the annual rate of 2.26% over the past 8 years. Please note this growth rate includes the effect of price inflation and it is NOT the real GDP growth rate. Current Annual GDP: $574 billion US dollars or 473 in billions of national currency.

Belgium GDP (Billion, National Currency)

Historical Stock Market Cap

Historical total market of Belgium in billions of national currency. This value is normalized using the data published by WorldBank. BEL20 is used for the normalization. The BEL20 is a market value-weighted index for the 20 largest companies traded in Belgium.

Belgium Total Market Cap (Billion, National Currency)

Historical Ratio of Total Market Cap over GDP (%)

The current ratio of total market cap over GDP for Belgium is 73.63%. The recent 20 year high was 138.19%; the recent 20 low was 46.04%. If we assume that the ratio will reverse to the recent 20 years mean of 83.27% over the next 8 years, the contribution to expected annual return is 1.55%. This is the detailed historical chart of the ratio.

Belgium Ratio of Total Market Cap over GDP (%)

Based on these historical valuations, we have divided market valuation into five zones:

Ratio = Total Market Cap / GDP Valuation
Ratio ≤ 58% Significantly Undervalued
58% < Ratio ≤ 75% Modestly Undervalued
75% < Ratio ≤ 92% Fair Valued
92% < Ratio ≤ 108% Modestly Overvalued
Ratio > 108% Significantly Overvalued
Where are we today (2021-01-25)? Ratio = 73.63%, Modestly Undervalued

Predicted and Actual Returns

From the equation presented on the U.S. market valuation page,

Investment Return (%) = Dividend Yield (%) + Business Growth (%) + (Re/Rb)(1/T)-1

We can compute the predicted and actual returns of the Belgium stock market over a given time period, T. In the calculation, we set T to equal eight years, the approximate length of a full economic cycle. The calculated results are presented in the chart below. The green line indicates the expected, or predicted return if the market ratio trends near the recent 20 years average ratio of 83.27% over the next eight years.

The blue line indicates the actual, annualized return of the Belgium stock market over eight years. We use “BEL20” to do the actual return calculation. We can see the calculations largely predicted the trend in the stock market as the blue line is closely parallel to the green line.

Predicted and Actual Returns of Belgium


The stock market of Belgium is expected to return 5.6% a year for the coming years. This is from the contribution of economic growth in local current prices: 2.26%, Dividend Yield: 1.76% and valuation reverse to the mean 1.55%.

This is the projected return of the stock market in Belgium relative to other countries. Click on each bar in the chart to go to other countries:

You can go here to see what international stocks Gurus are buying.

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