Capital Markets: Observations & Insights

Global Equity Multiples Reasonable ​ Valuation

• Price-to-earnings multiples around the world are modestly higher than their historical average, which is reasonable relative to very low global interest rates

= current

Price-to-Earnings Multiple +/- 2 Standard Deviations from 15-Year Average

= +2 std dev

20x

= average

= -2 std dev

15x

EM is least expensive in

10x

absolute terms and relative to history

5x

S&P 500 MSCI AC World MSCI EAFE MSCI EM

Z-Score (Standard Deviations Above/Below Mean)

0.9

0.5

0.2

0.1

Source: FactSet. Monthly estimates over past 15 years, ending 6/30/18.

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