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The US rating illusion

Investors Chronicle, 2023-04, p.61

Copyright The Financial Times Limited Apr 6, 2023 ;ISSN: 0261-3115

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  • Title:
    The US rating illusion
  • Subjects: Stock exchanges
  • Is Part Of: Investors Chronicle, 2023-04, p.61
  • Description: [...]if the superior returns that US shares have provided for over 10 years now are mostly about a cyclical swing prolonged by investors' collective infatuation with America's hegemonic tech stocks then, at some unpredictable point, the sentiment will shrivel, momentum will shift and share prices across the board will suffer. Smooth out the relative rating of these two indices over its 12-month moving average and the US premium is currently close to its 23-year average - 1.17 times to 1.14 times. Besides - and this is the nub - dig a bit deeper and it becomes clear that the superior performance of US shares has less to do with the relative ratings of the two indices and more to do with the better earnings growth produced by US companies. Currently, the index's 10 biggest components, measured by market value and including seven tech behemoths, are rated at an unweighted average of 32 times their latest 12-month earnings against about 20 times for the index's average.
  • Publisher: London: The Financial Times Limited
  • Language: English
  • Identifier: ISSN: 0261-3115
  • Source: ProQuest Central
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