CAPE Ratios by Country (Global Shiller PE Ratios)

The table below lists the historical and current CAPE Ratios of the largest economies in the world. Among the largest economies, Russia currently has the lowest Shiller PE ratio while U.S. is clearly the most expensive market when measured by this ratio. However, the CAPE ratios of different nations should not be directly compared to each other. The best way to evaluate if a country’s stock market might be undervalued or overvalued is to compare the nation’s current ratio to its historical average.

For the latest data, check the Global Equity Valuations Researcher Dataset by Siblis Research that provides CAPE ratios of more than 20 nations on a monthly level for the past 20+ years.

Global CAPE Ratios by Country


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Using CAPE Ratio to estimate global stock market valuations

The idea behind the CAPE ratio is that company earnings tend to be volatile and cyclical fluctuations have a huge impact on the traditional trailing 12-month P/E ratio. Instead of using annual earnings, CAPE ratio uses the average (inflation-adjusted) earnings of the last 10 years to smoothen out any regular cyclical variations.

Professor Shiller popularized the ratio when he demonstrated the clear historical relationship between the ratio and market returns when calculated for S&P 500 index. Multiple studies have shown that Shiller PE can be successfully applied also for global markets.

For additional information about using CAPE on a global scale, check the writings by Meb Faber. Mr. Faber’s blog covers practically everything you need to know about the ratio.

Global valuations at the beginning of the year 2021

Based solely on the CAPE ratio, the most expensive stock markets (among the 25 largest economies measured by GDP) can be found from United States, India and Japan. The most undervalued nations are Poland, Russia and Turkey.

The CAPE of thr S&P 500 index is currently 33.44 (12/31/2020), making the U.S. stock market clearly the most expensive among the largest economies.

So should you sell all your U.S. stocks and buy Russian and Turkish equities instead? The CAPE ratio of Russia looks temptingly low but it’s good to remember that the Shiller PE of the country has been lower than 10 since the financial crisis of 2007-2008. So based on the average valuations of the Russian stock market for the past ten years, the Moscow Stock Exchange looks actually quite pricey. Turkey’s valuation multiples are currently clearly lower than they have been in the past but based on the political turmoil in the country the low valuations can easily be justified.

From the table above, you can see that we have calculated two different versions of the CAPE ratio for Japan. The first version is based on the standard reporting practices of Japan in which the earnings and losses from subsidiaries of a parent company are not fully recognized. The second version has been calculated using fully consolidated earnings of the companies. Read more about our calculation methods for Japan from here.

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