The world has gone mad. Everywhere you look you see valuations that suggest insanity has become endemic amongst the world’s traders. Whether it’s oil, property or shares, prices just seem to keep going through the roof. And, as every investor will tell you, what goes up must come down, so presumably it will all go pop.

Take the US. Of late, the country’s biggest export seems to have become woe, and yet markets continue to flirt with all-time highs.

Take China. Shares in the economy behind the Great Wall have surged faster than a Rover leaving one of its factories. The CSI 300 Index has risen 170 per cent this year, and valuations are typically running at around 50-times earnings.

Take India. In that country, the leading stock market index is referred to as the Sensex, and it too has enjoyed a breathless ride. Yesterday, the index passed yet another high, and is now a stunning 42 per cent up on the lows seen in August. Over the last 20 months the index has doubled. And what about the score that counts? Well, right now, the overall valuation of the Sensex index is around 26 times earnings. Okay, that’s half the level seen in China, but way too high, surely.

Or is it? Think about it. If the index has doubled in 20 months, and is worth 26 times earnings, this means that 20 months ago, the index was actually trading at around 13 times earnings, 20 months into the future. Normally, when analysts calculate p/e ratios, they compare value with projected earnings. Sure, they only look 12 months ahead, not 20 months, but even so, you should have got the picture by now. Maybe Indian stocks are not quite as expensive as they first seem.

In a way, it’s a tad ironic. Foreigners are not allowed to invest in stocks listed on the Chinese market, so shares in the country rely on internal investment, and valuations leap to levels that have the most bullish freely using words like ‘bubble’.

In India, much of the surge in equity prices has been prompted by overseas investment. Foreigners have been allowed to buy shares listed in India since 1993, and according to The Times of India, $66.2 billion of foreign money has found its way in, with a third of this total coming since the start of 2002.

India often seems the forgotten superpower of economic growth. We talk about China and Russia, and yet India too is growing at a phenomenal rate. The IMF expects India to grow by 8.9 per cent this year and 8.4 per cent next, only just behind China, which is expected to grow by 11.5 and 10 per cent this year and next.

But then again, the Indian stock market is not unique in displaying bubble-like growth, while still maintaining a semblance of logic to valuations.

Yesterday, we told how the Hang Seng has surged 52 per cent this year, but that the valuations to earnings ratio is 19.2. Markets in Hong Kong have been boosted since the Chinese government announced last summer that some Chinese investors will soon be allowed to invest in shares listed on the Hong Kong stock exchange.

You will be familiar with those four letters BRIC: they stand for Brazil, Russia, India and China. Apparently, shares in Brazil are also valued at around 26 times earnings, while in Russia, valuations to earnings are a mere 13.

The IMF expects growth of 4.4 per cent in Brazil this year and 7 per cent in Russia. As for next year, it is projecting 4 per cent in Brazil and 7 per cent in Russia.

So you see, there are lots of bubbles there, but on closer inspection it is just possible that some are rockets on course for permanent orbit.

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