About a month ago, we looked at Year to Date Returns by Country [May 20: YTD Returns by Country, Go Peru!] Many of those top performers have since come back to Earth; in fact as we noted Russia is by "official definition" back in a bear market as its >20% off its high (I find this nomenclature system nonsense). Russia was #2 in the world behind Peru YTD at the time of the May posting...
Now Bespoke has an interesting graphic showing PE ratios among some of the major stock markets across the globe. Amazingly, Russia (even after that massive run for the year, and now giving back part of it) is the world's cheapest at 6, but again... in my eyes Russia is basically like buying a call option on oil. The US is middle of the pack at 14, but I will caution again PE ratio is more art than science now (trailing, forward, without adjustments, with adjustments, operational, GAAP) so putting 14 on the US is fraught with danger, and I'm sure there are anomalies in many of the other countries. One could make the case that the PE ratio for the US is 130 (trailing! including bank write offs of course) [S&P 500 at 130x Earnings] All that said, it's fun to look at.
It does appear European markets (ex Italy and France) are quite overpriced; I've written that a few times in the past 6 weeks (Germany and the UK are the 2 dominant Euro markets). But valuation analysis appears to be for fuddy duddies in this new era. Personally I am ok with higher valuations if the growth is there to support it... hence seeing the UK at 34x makes little sense while China at 29x is rich but understandable.
And if you believe the comparative data and still think valuations mean something in a computer driven, program trading momentum market; go short some iShares Taiwan (EWT). [remember that huge spike in Taiwan was due to an announcement that mainland China was looking to do direct investments]
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