A study of the dividend yields and price-earnings multiples of a list of 100 global stock markets makes for interesting reading.

With the sharp decline in stock markets over the past few months, valuation levels have obviously improved markedly. This is illustrated by the fact that 62% of the indices are now trading at PEs of less than 10, compared with a figure of 39% a mere one month ago.

The following graph, courtesy of US Global Investors, illustrates the PE compression that has taken place in developed and emerging markets respectively since 1999/2000.

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Value is undoubtedly starting to return to some stock markets, even if one factors in that the valuation metrics are based on historical figures and need to be adjusted for reduced earnings and dividend cuts. And, needless to say, many of the markets have made it to the top (i.e. “cheap”) end of the rankings on the back of pretty dismal circumstances.

Although the valuation tables do not represent a shopping list, they are a handy screening tool to trigger further research.

Click here or on the thumbnail below for the global index valuation tables.

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Source: Fullermoney (based on data from Bloomberg), November 6, 2008.

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