CHART OF THE DAY: 12 Economies' Stock Markets Versus GDP
There are many ways to value the stock market.
Some analysts will compare its price relative to the size of the local economy. Then they will compare that ratio to its historical averages.
Warren Buffett is known to favor market cap as a percentage of GNP.
Guggenheim Partners' Scott Minerd examined the market caps of twelve economies' market cap to GDP ratios and charted what they looked like compared to 10-year historical averages. Here's Minerd's commentary:
With continued monetary easing around the world and signs of a synchronous global expansion taking root, countries that were particularly hard hit over the past few years now present potentially attractive opportunities. Measured by market capitalization as a percent of GDP, Eastern Europe and smaller euro zone peripheral countries now appear to be the most undervalued of major regions worldwide. Major peripheral countries in the euro zone (Greece, Ireland, Italy, Portugal, and Spain) are also below their average level of market cap to GDP over the past 10 years, indicating further room for equity returns, compared to other developed markets. Emerging markets that suffered selloffs over the past few months also remain undervalued, including India, China, and South America.
This is not to say the U.S. stock market is doomed. It just means other markets look cheaper.
- I got a $40K raise using this 30-second strategy. It made me realize loud work, not hard work, always wins.
- Qatar Airways' new CEO explains why it's sticking with the Airbus A380 as other airlines retire the costly superjumbo
- Prince Harry and Meghan found out about Kate Middleton's cancer diagnosis on TV like everyone else, report says
- Consuming excessive salt and inadequate potassium, protein is making North Indians prone to life-threatening diseases: Study
- Upcoming cars and two-wheelers launching in India in April 2024
- Ice melt in Antarctica and Greenland is slowing Earth's rotation, affecting timekeeping: Study
- Elections on a plate: Poll panels fix menu & expense ceiling for Samosa, tea, biryani & more
- Regenerative farming, cover crops will help farmers increase yields, reduce stubble burning: IDH CEO