Japan Trading At A Discount To Other Developed Markets

Japan is one of the few developed economies whose overall trailing PE is below the long run median, due to stronger EPS growth than in Europe or the US, though it has the highest CAPE worldwide.

“The global PE based on trailing EPS has rerated back up to the 17x long run median. With EPS going nowhere over the period, this PE expansion has accounted for all the 46% increase in global equities since 2011,” says a recent Citi report. The US and Europe ex-UK are above their long run medians with a PE of about 19x.

Japan’s price growth driven by earnings

Japan, whose EPS growth wasn’t entirely based on multiple expansion, is trading at a discount to...