Country P/E Ratios and GDP Growth

We recently gathered the current P/E ratios and year-over-year GDP growth numbers for 22 countries that have trackable ETFs.  For P/E ratios we used each country's major equity market index.  We then calculated the PEG ratio for the country as a whole by dividing the P/E ratio by the GDP growth.  As shown below, Singapore currently has the lowest PEG (P/E/GDP) at 1.43, with a P/E of 12.69 and GDP of 8.90%.  Singapore is followed by Russia, Malaysia and South Africa.  At the bottom of the list with the highest country PEG ratios are the US, Italy and Japan.  The S&P 500 has a P/E ratio of 18.39 and GDP growth of just 2.8%.  The country with the lowest P/E ratio is Sweden, but its GDP growth is 2.6%, so it is right in the middle of the pack as far as PEGs go.  The country with the highest P/E by far is China, but its strong GDP growth gives it a PEG of 3.96.

Want to learn more about Bespoke? Check out our About page by clicking the button below.

 

Comments

[C&C]

Great compilation of statistics - very interesting the value of PE/GDP. - makes one realize that US P/E ratios are not only higher than most of their OECD peers, but also way-way out of line with the current GDP growth.
Would have been even more interesting if the consensus expected growth for the next year was included

[will rahal]

Investors are aware of the inverse relationship between inflation and P/E ratios. Not many know that relative inflation affects the Earnings-Yield to Bond Yield ratio. As the PPI rise faster than CPI, the EY-to-BY ratio also increases.
This translates to lower P/E's.
You can see this graphically at
"Inflation, the Fed and P/E Contraction"