A Dive on the Deep Side


By Monish Chhabra ǀ October 30, 2019

The global stock market index is near its all-time high. Yet, many pockets of the world are hovering around their decade-lows. Below are four such cases, where we sense deep value.

First is the case of traditional value businesses in developed markets. The following is the 12-year chart of such a portfolio we track in North America.

Traditional value in North America (starting base of $10)

The dotted-blue line is the mean line (showing the average trend), and the two solid-blue lines are the bottom trend lines (showing the lower bound of the trends).

The current level is almost as low as the bottom in 2008 crisis. It seems these guys are living a decade behind.

And it is not just the case for the developed markets. Old-school value is suffering just as much in the emerging markets.

The following is the 17-year chart of a portfolio of such businesses we track in the emerging markets outside Asia.

Traditional value in the Emerging Markets ex-Asia (starting base of $10)

Here as well, the current level is near the lows of 2008 crash. And its not just the trend low, which we saw in the developed markets. Even on absolute basis, these above-average businesses in Latin America, Middle-east, Africa, Eastern Europe and Russia, haven't seen much love for a decade.

Closer to home, the following is the 25-year chart of a portfolio of old-economy value businesses we track in Southeast Asia.

Traditional value in Southeast Asia (starting base of $10)

Not only is the current level below the 2008 crash, it is also lower than the SARS crisis of 2003 and similar to the dot-com bust of 2000. The only point lower in the past two decades, was the bottom of the Asian Financial Crisis in 1998.

Lastly, we come to a place which is really touching its lowest in the last 25 years. The following is the chart of a portfolio of small-mid cap growth businesses that we track in India.

Small-mid cap growth in India (starting base of $10)

Cutting far below the average trend of the dotted line, the current level is near the lowest-bound solid line. Even if it treads along this bottom line, it would still provide satisfactory growth. Any move to a higher trend, would be bonus.

At any moment, while there is plenty to surf at the top, there is also enough to dive deep for.

This write-up is for informational purpose only. It may contain inputs from other sources, but represents only the author’s views and opinions. It is not an offer or solicitation for any service or product. It should not be relied upon, used or construed as recommendation or advice. This report has been prepared in good faith. No representation is made as to the accuracy of the information it contains, nor any commitment to update it.