March 11, 2016

Time to buy in Belgium - Stern buys a steel company Bekaert stock

The current Obermatt Top 10 list now covers Belgium. That’s good news because the Belgian stock market is undervalued, as Obermatt shows in its current stock index research. As a matter of fact, Belgium has the cheapest stocks in all of Europe. Not even Russian stocks are cheaper, despite their much higher risk profile.

Since this is hard to believe, Obermatt CEO Dr. Hermann Stern did some research to verify the value rating in Obermatt’s market index research. He stumbled across MarketWatch, which says that the Belgian stock market is actually expensive. Who’s right? Looking into the MarketWatch research method reveals the difference. MarketWatch looks at absolute valuation multiples; we look at relative valuation multiples within the same industries.

The result of this difference is that countries with a focus on industries with typically high valuation multiples look expensive, and vice versa. However, that’s the wrong conclusion. Belgium has a concentration of companies in high valuation multiple industries, but this doesn't make them expensive. Conversely, our research reveals that the companies in Belgium have lower multiples than companies in the same industries in other countries.

Therefore, Dr. Stern believes that MarketWatch is wrong. Belgium is not an expensive market, it’s actually offering a lot of value. Out of the top 10 Belgium stocks, he chose Bekaert, a company specialized in steel components for the automotive and construction industries with global operations. This is a good opportunity because he thinks that both housing and transport will be booming industries in the future.

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