Global Market P/E Ratios

Our Methodologies

The Valuation Score is a composite measure designed to evaluate the relative attractiveness of global equity markets. The framework combines two complementary valuation metrics that assess a market against its own history and its long-term earnings power. This allows consistent cross-country comparisons while accounting for structural differences across markets. Detailed scoring parameters, sensitivities and weightings underlying the composite score are proprietary to 1 Finance Research.

Scoring Framework

The composite score is derived from two valuation components:

• P/E Ratio: Compares the market's current trailing P/E with its own 10-year average P/E.
• CAPE Ratio: Compares cyclically adjusted earnings (CAPE) with current trailing earnings (P/E). This shows whether today's earnings are running above or below their long-term normal level.

Each component is scored on a 0 to 100 scale, where 50 means the metric is in line with the market's own historical norm and higher scores indicate richer valuations. The composite gives a 70% weight to the CAPE component and 30% to the P/E component. By looking at both current valuation against its own history and the quality of today's earnings against their long-term trend, the framework gives a more complete assessment than either metric alone.

Score Interpretation

The index valuation score is interpreted as follows:

• Below 30: Highly Undervalued
• 30 to 45: Undervalued
• 45 to 55: Fairly Valued. Scores in this range indicate valuations broadly in line with the market's own history.
• 55 to 70: Overvalued
• 70 and above: Highly Overvalued

Scores are updated monthly, as of the last trading day of the month.

References:

• S&P Global Market Intelligence LLC, via Simply Wall St
• Research Affiliates, LLC / Syzygy Asset Management, Asset Allocation Interactive
• 1 Finance Research