Here are a couple of interesting graphics emailed to me by SeekingDelta, a finance professional and blogger, who has created a World Market Valuation Heat Map based on data made available by Aswath Damodaran, a Professor of Finance at the NYU Stern School of Business.
Here is an excerpt from the accompanying analysis:
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.
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