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Valuation metrics such as P/E and EV/EBITDA serve as popular guides to projected future equity performance. In general, countries with lower valuations are expected to outperform those with higher valuations but with greater volatility along the way. As I'll show, valuations across the globe depend primarily on equity price volatility, systematic exposure, and qualitative political risk. By creating a model of estimated fair value based on these statistics we can also see which countries are the cheapest on a risk-adjusted basis.
I'd like to focus in on Europe because there is a