Infographics from the Marketwatch
Some observations
Although the infographic above exhibit both the least and most expensive stock markets of the world, pardon me for focusing on the latter. Global stock markets have been on a tear.
Expensive hardly signifies a product of growth. When the numerator (returns) extensively outpace the denominator (earnings), this is called price multiple expansion.
Thus, the consequence of a frantic yield chasing phenomenon is a steeply overpriced stock market. For the Philippines, combine the rampant use of “marking the close” or the price fixing process to its stock market’s exorbitance.
“Expensive” did not occur in a vacuum. Such pricing imbalance signifies a ramification of a time-consuming process.
Two of the top five most expensive stocks in the world had been from ASEAN. The distinguished third runner up represents no other than the Philippine Phisix.
My impression has been that the numbers used for Philippine stocks were computed using the average. The Phisix is a market cap weighted benchmark. To apply a market cap weighting to the figures above would expand PER by about 20% premium!
According to the local church of asset bubbles, there is no such thing as expensive. Prices have only one direction—UP, UP and away!
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