Last week we sent the chart below to our subscribers that highlights the returns of each country's major index since March 12, 2003 (the start of the current bull market of the MSCI World Market Index). We compared these returns to the current P/E ratios (blue dots) of each index along with the change in the P/E ratio (black lines) since March 12, 2003.
Interestingly, the four indices that have seen the largest price increases (South Africa, Mexico, India and Russia) currently have the lowest P/E ratios. Japan's Nikkei has had the largest P/E decline, going from 102 to 33.7.
In the past we've highlighted that P/E ratios have actually compressed in the US during this bull market, but this holds true globally as well. Only 2 of the 17 indices have seen an expansion in their P/E ratios since the start of the global bull market, and those increases were minimal, indicating that earnings growth has far exceeded price rises, even as prices have soared.
as of 6/13
Update: India's P/E is actually at 17.74. We had a calculation error that showed the P/E as 5.63 in a prior chart, so actually 3 of the 17 countries have had P/E expansions.