International Investing Opportunities
Posted by Gregg Killoren on June 26, 2009
In some recent posts, this author has noted the need to diversify one’s equity portfolio outside the United States. The U.S. equity market will likely remain in a bear market (with some mini-bulls like the current environment) for many years yet. So, to maximize investment return, it only makes sense to find countries that will benefit most as the world recovers from one of the worst recession/depressions in history.
Below is a report from Bespoke Investment Group LLC showing the price-to-earnings (PE) ratio for various countries:
Yesterday we released a B.I.G. Tips report to our Bespoke Premiummembers taking a look at valuations, growth expectations, and stock market performance for more than 20 countries that have trackable ETFs. The report highlights which countries currently look the most and least attractive based on various characteristics. One simple data set highlighted was the current P/E ratios for these countries. Below is a chart showing these valuations. As shown, Russia currently has the lowest P/E ratio at 6, followed by Italy (10) and France (11). At 14, the US is more attractive based on its P/E ratio than most countries. Taiwan has the highest P/E at 60, and the UK is surprisingly bad at 34. It’s valuation is worse than China’s. Germany also has a very high P/E ratio at 27.
Observe that two of the favorite “BRIC” countries, China and Brazil, are not bargains at current levels with respective PE ratios of 29 and 20. Among the more attractive valuations vis-à-vis growth potential are Canada, South Africa and India. To generally invest in Canada, South Africa or India, one may want to consider their representative exchange-traded funds: Canada=EWC; South Africa=EZA, and India=INP.
The U.S. also offers an attractive PE ratio, so I am certainly not recommending completely divesting one’s portfolio of U.S. equities. But given that U.S. GDP is forecast to barely grow in 2010 and the uncertainty beyond, it is worthwhile to investigate other countries.
Good hunting!
Doug Crowe said
The world economy is going through dramatic shifts. Traditionally, we have seen long bull markets followed by shorter bear markets. This ebb and flow has been going on for the better part of this century.
However, the long term view has also see the rise and fall of the Roman, Spanish, and British Empires. Their demise was a combination of social, political and real estate.
Things are happening faster now and our government’s irresponsible spending behavior will surely bankrupt us in the next decade or so. Establishing an offshore financial fortress is prudent. Visit my blog for more insight. http://www.dacrowe.wordpress.com
Review of Countries That Have an Economic Edge « Raw Finance said
[...] international investing opportunities appeared to be in Canada, India and South Africa (see International Investing Opportunities). Now, RGE Monitor has reviewed the countries that have best endured the financial crisis, taking [...]
EAFE Pro said
The world economy is going through dramatic shifts. Political tensions arise and that leaves great investments to be found. See http://eafepro.com for ideas.