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DM Valuations Monitor

DM Valuations Monitor

Relative equity valuations amid a bond market tantrum

We suspect the sectors of the equity market where valuations are the lowest will continue to weather the storm of rising bond yields a bit better than others. Drop-In (13th April, 16:00 SGT/09:00 BST): Will political turmoil in Pakistan and Sri Lanka lead to debt defaults? Join our EM economists this Wednesday for a discussion about economic and political turmoil in South Asia. Register now

12 April 2022

DM Valuations Monitor

Tech sector valuations may have even further to fall

Even though the valuations of technology stocks have, in general, already fallen sharply in recent weeks, we suspect they may decline further over the next couple of years. This is one reason why we expect the sectors in which they are heavily represented to make limited gains, at best, over that period.

25 January 2022

DM Valuations Monitor

Assessing the outlook for US equity valuations

We forecast that the valuation of the US stock market will deflate a bit further over the next couple of years, though we are not expecting a sharp decline.

8 October 2021
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DM Valuations Monitor

High valuations may hold back risky assets

While we don’t think that risky assets are in a systemic bubble, we suspect there is limited scope for further large increases in valuations to drive their prices higher over the next few years.

DM Valuations Monitor

Limited scope for valuations to push risky assets higher

In our view, changes to the economic and policy outlook since the pandemic mean that corporate credit spreads in the US may remain lower than in their recent past for some time. Nonetheless, we see limited scope for them to fall much further from here. This, coupled with our view that US long-dated TIPS yields will rise gradually over the next couple of years, suggests to us that further gains in US equities will be relatively small, and increasingly driven by expectations for strong earnings rather than higher valuations.

15 April 2021

DM Valuations Monitor

Little evidence of widespread overvaluation in risky assets

Despite signs of exuberance in a few markets, we don’t think that we are in the late stages of a bubble in “risky” assets generally. Provided vaccines enable the gradual relaxation of coronavirus restrictions around the world, we continue to forecast that the prices of most risky assets will rise further.

14 January 2021

DM Valuations Monitor

Risky assets are not significantly overvalued in our view

While the S&P 500 is now above its pre-pandemic level, and US investment-grade corporate bond yields are even lower, we do not think that the valuations of “risky” assets in the US or elsewhere are unsustainably high. In fact, we expect equities and corporate bonds to rally further and many developed market (DM) currencies to make further ground against the US dollar between now and end-2021.

13 October 2020

DM Valuations Monitor

Valuations unlikely to halt recovery in risky assets

Despite talk of a bubble in “risky” assets, we do not think that their valuations are particularly stretched and will prevent them from gaining further ground over coming months.

10 July 2020
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