Which of the major stock markets are 'cheap' going into 2018?: Schroders

SINGAPORE (Dec 28): Global investors should beware the temptation to simply compare a valuation metric for one region with that of another, according to global investment manager Schroders.

In a Thursday media release, Duncan Lamont, Head of Research and Analytics, discusses the five ways to measure stock market value, namely: forward price-to-equity (P/E), trailing P/E, cyclically adjusted P/E (CAPE), price-to-book (P/B) and dividend yield.

An obvious drawback of using forward P/E as a valuation measure, says Lamont, is that no one knows what companies will earn in future, and that analysts have a tendency of overestimating and making shares seem cheaper than they really are.

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