Global value managers must 'dig deeper'

As markets have risen, so have P/Es, says Templeton's Peter Moeschter.

Sonita Horvitch 17 June, 2015 | 5:00PM

Peter Moeschter, executive vice-president, Templeton Global Equity Group, at Franklin Templeton Investments Corp., says that although the global equity market has done well in the last few years and become more expensive, there is still value to be found in individual stocks. "You just have to dig a little deeper," says Moeschter, a traditional value manager.

Focusing on developed markets, Moeschter notes that there has been a steady increase in stock prices in the last number of years. This has resulted in higher price/earnings multiples in general on stocks, as corporate earnings growth in the developed world has been slow," he says. "There needs to be a continued improvement in corporate earnings over the next 12 to 24 months to support the global equity market."

At the end of May, the benchmark MSCI World Index, which represents 23 developed markets, traded at a price/earnings multiple of 19.8 times trailing earnings per share. "This is somewhat high by historic standards," says Moeschter. But this is to be expected given the historically low level of interest rates and the expectation that earnings will continue to improve."

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Amgen Inc217.88 USD-2.20
Citigroup Inc72.53 USD-5.12
Gilead Sciences Inc72.90 USD4.59
Hudson's Bay Co10.94 CAD-0.09
JPMorgan Chase & Co132.16 USD-2.69
Vodafone Group PLC ADR19.30 USD-3.79

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Sonita Horvitch

Sonita Horvitch