PlanetQuant's World Equity Rankings and ETF Analysis

For the United States, its deja vu all over again. This past week, the US S&P 500 closed at about the same level it had fallen to ninety days ago when the subprime mortgage crisis first the markets. In the same period, Europe has gained almost 10%, Asia Pacific is up 25%, and Latin America is up 35%, once again highlighting the benefits of international diversification. Volatility has spiked in emerging markets, partly because of the recent correction in China and the spillover to other Asian indexes, including Hong Kong, Singapore, and Taiwan. This may be due to fears that the falling US dollar and weak domestic economy will impact these export-led economies disproportionately. Brazil and Spain were the only two countries with gains in the last two weeks, but that's only part of the reason that the pair are first and third in the rankings. Both have been excellent performers during the past year, often delivering positive returns while other indexes are flat or falling. The best valuations are found in Belgium, but the high concentration of financial stocks in that country's market has kept returns very low this year. METHODOLOGY: ETF prices are compiled daily from Yahoo! Finance/Morningstar data. Published valuation ratios are used and then adjusted based on daily price changes. Correlations are based upon one year, and volatility is based upon twenty-two market days. The scores from 0 (worst) to 4 (best) represent the range (2 +/- 2 standard deviations) of normalized variables for a category. For example, a valuation score of 3 for a country indicates that the valuation variables (p/e, p/b, and p/cf) equal-weighted, are one standard deviation better than the average for the group.