Foreign Markets: Valuations
T. Rowe Price is out with their 2015 outlook which was reviewed over at Business Insider.com. {You can click the link at the end of this article if you want to view the whole slide presentation.} One of the things that stands out as presented in the slide below is how cheap emerging markets are compared to the US.
Long time readers here know I've been beating the emerging and foreign developed markets drum for a long time. The last time we discussed this was here. Too say that these markets have for the most part disappointed over the past few years would be an understatement. This is especially true when comparing most of these to the US markets. Yet I wonder if these may begin to start getting their due by investors. Even accepting that many of these countries have some "hair on the dog" right now {Russia has a problem with the West and Ukraine, Brazil has an ongoing scandal with Petrobras and corruption}, valuations in many are compelling as are their dividend yields. Compare the average PE above at 12.9 to the S&P 500's nearly 17 PE on a trailing basis and the average yield nearly a percentage point higher than the S&P. I'll also say that there's some interesting things I'm starting to see in regards to money flows into these areas. I might discuss that in detail at another time.
Look for all I know these markets may be losers again in 2015. They've underperformed much longer than I thought was possible and are probably the most hated asset class out there right now. But that doesn't mean they shouldn't be on our radar screens and open to the possibility that 2015 just might again be their time to shine.
*Long individual ETFs related to China & Brazil and the S&P 500 in certain client accounts and strategies. The rest of the countries shown in the above chart and Petrobras are represented in various foreign ETFs we own in client and personal accounts. Please note these positions can change at any time and without notice to readers here.
posted by CR English at 8:40 AM
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