Goldman Sachs: The industrial sector is “more expensive” than technology stocks, and the pricing logic of the global sector is changing

The Zhitong Finance App learned that Goldman Sachs Research's latest sector valuation analysis shows that the 12-month forward price-earnings ratio of the industrial sector is now higher than that of the technology sector, indicating that the relative valuations between various sectors of the global stock market are changing. The forward price-earnings ratio of the industrial sector is 19.4 times, higher than 16.7 times the overall market and 16.2 times that of the technology sector. The industrial sector also ranks among the most highly valued sectors in the global stock market, second only 20.6 times growth stocks, 18.7 times essential consumption, and 18.7 times non-essential consumption.

The study compared the valuation of various sectors and styles of the MSCI Global Index with historical data from the past 20 years.

This valuation gap is worth watching because the tech sector has historically enjoyed a premium over many other sectors. According to Goldman Sachs data, the forward price-earnings ratio of the communications services sector is 18.1 times, and healthcare is 17.7 times. Utilities are 15.1 times, materials are 14.6 times, and value stocks are 14.0 times.

In contrast, the energy sector had a forward price-earnings ratio of 12.8 times, while the financial sector had the lowest price-earnings ratio of all sectors, 12.7 times. This difference highlights the huge difference between current valuations and long-term historical levels of the global stock sector.

At the time these data were released, investors were evaluating sector allocation based on changes in interest rates, profit growth, and capital expenditure expectations. Goldman Sachs also pointed out that the overall valuation of the US stock market declined somewhat this year. The forward price-earnings ratio of the S&P 500 fell from about 22 times to 19 times, while the valuation compared to bonds remained basically unchanged.