Global vs Country CAPE: Why Markets Diverge
Why the US, UK and global CAPE ratios can sit at very different levels — and what that divergence does and does not tell investors.
If you look across markets, you will notice the CAPE ratio is rarely the same in two places. The US often trades at a high CAPE, the UK at a much lower one, and the global figure sits somewhere in between. Why?
Composition matters
A market's CAPE reflects what it is made of. The US market is heavily weighted toward fast-growing technology and healthcare companies, which command higher valuations. The UK market is tilted toward banks, energy and consumer staples — mature, slower-growth sectors that have historically traded at lower multiples.
So part of the gap is not "one market is cheap and the other expensive" — it is that they hold different kinds of businesses.
Structural and macro drivers
Several forces push country CAPEs apart:
- Interest rates and inflation regimes differ by region.
- Profit margins have trended differently across economies.
- Currency and capital flows affect where global investors put money.
- Accounting and payout norms vary across jurisdictions.
How to use the comparison
The most useful comparison is each market against its own history, not one market against another. A UK CAPE of 16 might be middling for the UK, while a US CAPE of 33 might be very elevated for the US. The global figure is a helpful summary, but country-level detail is where the interesting decisions live.
That is exactly why this site is built around a generic metric system: the same historical context — average, median, percentile, and a full chart — is available for every market we track, with more to come.