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Global Valuations: U.S. Stocks Trading At Sharp Premium To World Equities

ByCallum Thomas
Published 12/01/2021, 12:10 AM
Updated 07/09/2023, 06:31 AM

Global PE10 Valuations: the chart below compares the PE10 ratio (i.e. price vs trailing average earnings over a rolling 10-year look-back period) across the major chunks of global equities: i.e. USA, Emerging Markets [EM] and Developed Markets excluding-USA [DM ex-US].

The clear standout is US valuations, which are approaching dotcom bubble levels in absolute terms. Not only that, US is trading at a very sharp premium relative to the rest of the world (at 2.25x that of global ex-US — which is the highest valuation premium ever recorded!).

Although emerging markets and developed ex-US are up quite a bit from the extreme cheap levels they were last year, they still offer a significantly cheaper valuations compared with the US, and look reasonable vs their own history.

Global Equity Valuations

Key point: US PE10 valuations look stretched, especially relative to EM and DM ex-US.

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