Country P/Es and Momentum

Below we have a table of major countries ranked by a combination of valuation and momentum.

Valuation is often one of the largest factors determining long term returns, while momentum has been more predictive in the short term. By combining both, we are trying to pick countries that have both long term and short term tailwinds.

We used median p/e, p/b, and p/s to compare valuations. Using the median instead of the average helped to make comparisons more accurate because some countries had significant number of companies with negative or unusually low earnings.

Momentum was compared by calculating an exponentially weighted rate-of-change calculation on ETFs representing each country. While this is my preferred method, comparisons using the previous 12 or 6 month’s returns are very similar.

Looking at the results, emerging markets appear to be a recurring theme as well as an Asian theme appearing. Four of the top five countries are emerging markets, while five of the top six are in (or partially in) Asia.

Rank	Country	ETF	Median P/E	Momentum Rank
1	South Korea	EWY	12.4995	6
2	Brazil	EWZ	14.85	4
3	Hong Kong	EWH	13.34	2
4	Russia	RSX	14.08	5
5	Taiwan	EWT	14.505	7
6	Japan	EWJ	8.434	17
7	Belgium	EWK	11.5	14
8	Sweden	EWD	16.64	3
9	Spain	EWP	10.72	18
10	India	EPI	23.79	1
11	Israel	EIS	11.37	15
12	Switzerland	EWL	15.835	8
12	Australia	EWA	17.125	9
14	United Kingdom	EWU	15.1	11
15	China	FXI	15.635	12
16	France	EWQ	14	21
17	Canada	EWC	17.115	10
18	Italy	EWI	15.66	22
19	Germany	EWG	19.71	20
19	United States	SPY	16.03	16
21	Netherlands	EWN	19.933	19
22	Mexico	EWW	17.97	13