margin expansion - Ceta Research

Annual spread between expanding and contracting margin portfolios across 14 global exchanges.

margin expansion

Margin Expansion Across 14 Exchanges: Where Operating Margins Predict Returns

We tested margin expansion across 14 exchanges against local benchmarks. Taiwan produced a +6.85% annual spread. India showed a -12.86% reverse signal. The US posted +1.34%. Expanding margins beat the local index in 9 of 14 markets. Full data for all 14 exchanges included.

Cumulative growth chart comparing expanding, stable, and contracting margin portfolios on Indian stocks (NSE) from 2000 to 2025.

margin expansion

Margin Expansion on Indian Stocks: The Signal Runs in Reverse

We tested margin expansion on NSE from 2000 to 2025. Contracting margins returned 16.30% CAGR vs 3.44% for expanding. The quality signal runs backward in India. Cyclical sectors and growth dynamics flip the expected relationship.

Cumulative growth chart comparing expanding, stable, and contracting margin portfolios vs S&P 500 on US stocks from 2000 to 2025.

margin expansion

Margin Expansion Backtest: Stable Margins Beat Expanding Ones on US Stocks

We tested margin expansion as a stock signal across all US exchanges from 2000 to 2025. The surprise: stable margins (9.78% CAGR) beat expanding (7.17%) and contracting (5.83%). $10,000 in stable-margin stocks grew to $103,004 vs $56,472 for expanding margins.

Growth comparison of expanding vs contracting margin portfolios in Taiwan from 2001 to 2025.

margin expansion

Margin Expansion in Taiwan: +6.85% Spread, the Strongest Signal in 14 Exchanges

We tested margin expansion as a signal on Taiwanese stocks from 2001 to 2025. Expanding margins returned 9.22% CAGR. Contracting margins returned 2.37% per year. The +6.85% annual spread is the widest of any exchange in our 14-market study. Low beta (0.64), positive alpha (+5.10%) vs TAIEX.

Growth comparison of expanding vs contracting margin portfolios on the LSE from 2000 to 2025.

margin expansion

Margin Expansion in the UK: A Signal That Strengthened Over 25 Years

We tested margin expansion on LSE stocks from 2000 to 2025. Expanding margins returned 7.81% CAGR vs 5.88% for contracting, a +1.93% annual spread. The signal stabilized post-2010 after mixed early results. Beta 1.01, alpha +6.68% vs FTSE 100 price index. Zero cash periods.