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Dig into the valuation dynamics of China listed companies deeply, focus on their investment value, and accurately analyze the potential and risk of valuation.
With more than two decades experiences in China market, Glebors has been positively digging into the most valuable China listed companies through a series of comprehensive criterion.
How a value strategy is constructed may have a big impact.
The U.S. bull market is now the longest in history, leading the way for strong global equity returns over the 10 years since the financial crisis. What does this mean for valuations? Glebors find that while they are high, they have not reached extreme levels. Moreover, there are distinct valuation characteristics across regions, sectors and factors that may create potential investment opportunities.
Regardless of how different investors may interpret these findings, they may be useful to differentiate across sectors because value construction is a key performance driver.
Given investor concerns about the sustainability of global economic growth and heightened geopolitical risks, it’s not surprising that quality has been outperforming; high-quality companies are trading at premium valuations, such as information technology and consumer discretionary and priced close to its peak relative valuations.
To conclude, market valuations across the globe are high, but have still not reached nosebleed territory on a historical basis. Within the broader equity markets, Glebors sees a significant dispersion in valuations, likely offering investors cheaper investment themes across different regions, sectors and factors.
Dig into the valuation dynamics of China listed companies deeply, focus on their investment value, and accurately analyze the potential and risk of valuation.
With more than two decades experiences in China market, Glebors has been positively digging into the most valuable China listed companies through a series of comprehensive criterion.
Along with other factors, comparing current sector valuations to longer-term averages has helped investors as they make decisions about whether to rotate in or out of specific sectors.
For example, the first thing to notice on both the price-to-earnings (P/E) and price-to-book (P/B) charts below is how, the most current measurement is above the top quartile of the distribution. In other words, during this period, more than 75% of the measurements would have been lower than the current level.
Having previously examined small caps’valuations relative to their profitability and long-term EPS growth forecasts and the relative valuations of equities and bonds, we now turn our focus to small caps’valuations relative to their larger peers.
Small-cap stocks have underperformed large-cap and mid-cap stocks by about 35% over the last five years and by roughly 10% this year, both periods ending Sept. 30. This has led to unusually low valuations for small caps.
Certain shades of value have done better than others over time. Valuation measures such as price to book, forward price to earnings and enterprise value to operating cash flow are widely used to identify stocks that may be viewed as inexpensive.
The enterprise multiple was the most resilient of the three value measures over the last decade in the U.S., in a period that was not favorable for value stocks. That trend has continued as firms with a high enterprise multiple have significantly outperformed those with a high book-value multiple over the past year.
