U.S. Markets closed

UK and China Markets Remain Undervalued Despite Scary Geopolitical Concerns

On Halloween, the U.K. and China stock markets remain undervalued despite geopolitical concerns giving investors an early scare.

According to Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) CEO Warren Buffett (Trades, Portfolio)'s favorite market indicator, the ratio of total market cap to gross domestic product, the contribution to the expected annual return assuming mean-reversion is 0.37% for the U.K. market and 16.74% for the China market based on current market valuation levels of 114% and 41%. On the other hand, the expected annual return for the U.S. market is -2.2% based on the current market valuation level of 145.3%.


1572534795351.png
1572534825527.png
1572540476107.png

Dow tumbles during early morning as trade optimism fades

The Dow Jones Industrial Average traded at an intraday low of 26,948.76 Thursday morning, dipping below 27,000 and down 237.93 points from Wednesday's close of 27,186.69 on renewed worries about a long-term trade deal between the U.S. and China. Bloomberg News reported, citing unnamed sources, Chinese officials grapple with President Trump's "impulsive nature" and the risk that Trump might call off the trade deal. Despite this, Trump said in a tweet, China and the U.S. are "working on selecting a new site" for the signing of phase one of the trade deal, which represents approximately "60% of the total deal."

fb00494b79d5da172d7d38cd03661585.png

Although shares of Apple Inc. (NASDAQ:AAPL), the top holding of Berkshire, increased 1.7% on the heels of reporting strong September-quarter earnings, declines in Caterpillar Inc. (NYSE:CAT) and Micron Technology Inc. (NASDAQ:MU), a major holding in Mohnish Pabrai (Trades, Portfolio)'s U.S. equity portfolio, offset strong gains in the Cupertino, California-based tech giant.

Value screeners identify opportunities

GuruFocus' value screens continue identifying good investing opportunities even when geopolitical issues like Brexit and the U.S.-China trade war crowded the trick-or-treating atmosphere. Table 1 details the value screener record as of Oct. 31.

Screener

USA

Asia

Europe

Canada

UK /

Ireland

Oceania

Latin America

Africa

India

Graham Net-Net

151

512

193

43

41

11

6

14

54

Undervalued Predictable

40

85

114

7

47

5

43

3

18

Buffett-Munger

23

99

60

3

27

0

20

3

44

Historical Low PS

16

141

64

1

23

0

32

8

34

Historical Low PB

56

144

66

1

33

2

37

8

46

Peter Lynch Screen

26

56

28

0

13

0

5

5

25

High Dividend Yield

60

38

135

6

17

4

19

12

11

52-week Lows

1546

3869

1633

162

540

54

413

159

979

52-week Highs

2420

2354

3271

224

1218

213

619

127

589



Table 1

Disclosure: No positions.

Read more here:

  • 5 Eerily Low Price-Sales Stocks With High Financial Strength
  • Buffett Holding Amazon Spooks Investors With Weak Holiday Guidance
  • Invesco European Growth Fund Starts 1 Position, Boosts 5 Others in 3rd Quarter



Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.

This article first appeared on GuruFocus.