The graph of the day presents the historical PER forecasts for the main MSCI indices (USA, Euro Zone, emerging markets, United Kingdom and Japan). As a reminder, the forecast PER corresponds to the current share price divided by analysts’ estimates of net earnings per share in 12 months.
Source yardeni.com – Refinitiv
The United States goes it alone:
Far at the top, valued at 19.9, the American index, historically better valued, is distinguished by a forecast PER that is very clearly higher than its runner-up in the Euro zone for several years now. Future benefits are currently valued around one-third more expensive in the United States than in Europe.
The USA, less sensitive to market falls:
Where the American index stands out is not only by its higher valuation but above all by its resistance to market falls. In 2016, the forecast PERs of the indices are concentrated but from 2017, the gap widens between the USA and the others, thanks to the rise in technology stocks. The observation has been the same since 2020 where all the indices have lost quite sharply in value (from 18.0 to 14.0 for the Euro zone, 16.0 to 12.0 for the United Kingdom) while the USA index has stagnated and fallen much less violently (from 23.0 to 21.0). It took a recent collapse in US tech stocks to see the US forecast PER drop sharply below 20.0 (19.9 on January 27).
Are emerging markets sold out?
The MSCI emerging markets index shows a forecast PER of 12.2, its future profits are 40% less well valued than those of the USA. The recent difficulties of Chinese real estate giant China Evergrande and the general downgrade of Chinese stocks seem to have weighed on confidence in the future performance of emerging countries (China accounts for ⅓ of the MSCI emerging markets index).