Are equities in Latin America still overvalued?

Equities in Latin America have fared worse than those in other emerging market regions since the start of 2014, losing over 8% of their value. As a result, the 12- month trailing price/earnings ratio is now 14.7, down from over 16 at the turn of the year. On this measure, valuations in Latin America no longer look that high relative to a historical average. What’s more, other measures suggest the region’s stock market may be close to fair value. The cyclically-adjusted price/earnings ratio for equities in Latin America is lower than for those in emerging markets in aggregate. And dividend yields in the region are now within a whisker of their historical average, too.