margin expansion - Ceta Research

Annual spread between expanding and contracting margin portfolios across 12 global exchanges.

margin expansion

Margin Expansion Across 12 Exchanges: Where Operating Margins Predict Returns

We tested margin expansion across 12 global exchanges. Taiwan produced a +15.57% annual spread. India showed a -14.24% reverse signal. The US barely registered at +0.83%. Margin expansion works in concentrated, export-driven markets and fails in diversified or high-growth economies. Full data...

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 (9.72% CAGR) beat expanding (6.12%) and contracting (5.29%). $10,000 in stable-margin stocks grew to $101,587 vs $44,188 for expanding margins.

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

margin expansion

Margin Expansion on Indian Stocks: The Signal Runs in Reverse

We tested margin expansion on BSE and NSE from 2000 to 2025. Contracting margins returned 17.65% CAGR vs 3.41% for expanding. The quality signal runs backward in India. Cyclical sectors and growth dynamics flip the expected relationship.

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

margin expansion

Margin Expansion in Taiwan: +6.51% Spread, the Strongest Signal in 12 Exchanges

We tested margin expansion as a signal on Taiwanese stocks from 2001 to 2025. Expanding margins returned 9.71% CAGR. Contracting margins lost 5.86% per year with a -93% max drawdown. The +15.57% annual spread is the widest of any exchange in our 12-market study. Low beta (0.73), positive alpha...

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 7.49% CAGR vs 5.07% for contracting, a +2.42% annual spread. The signal was negative in 2000-09 but strengthened to +5.6% by 2020-25. Beta 0.918, alpha +0.50%. Zero cash periods across all portfolios.