It’s been an unheralded birthday. The global bull market in equities is now five years old.
The S&P 500, which tracks US equities, bottomed out at 776 on 9 October 2002. That was a time when the world was still recovering from the dotcom collapse and the US economy was flirting with recession.
The Indian bull market took a few more days to get into the act. The BSE Sensex bottomed out at 2,834 on 28 October 2002. Since then, it has gone up at an average annual rate of 45.78%.
Five years ago, developed markets were trading at an average valuation of 30 times earnings, while the emerging markets had to make do with a multiple that was half this level.
As John Authers pointed out in Financial Times on 24 September, the valuation lines have crossed. And emerging markets can today boast of higher earnings multiples.
Markets such as India and China are being rewarded for their superior growth. But still, is this a bubble?