Where you’ll find the cheapest and most expensive stock markets in the world

How do you know if stock markets are undervalued or overpriced?

Our valuation tracker is a tool that shows how major global equity indices are valued across key financial metrics, which we update quarterly. We have built a table that shows you how these metrics are valued on equity indices worldwide.

To help interpret the data, we spoke with our investment experts to explore the key opportunities and risks across global markets.

UK & European Equities team

UK

UK equities offer exposure to many high-quality, cash-generative companies trading at valuations below global peers, even after taking account of differences in return-on-capital. They offer compelling income streams and capital growth that can provide a valuable defence against inflation.

Sector exposures are very different from other global equity markets, bringing additional diversification benefits.

Stability of government and ongoing improvement in relations with European capitals after years of distance over issues relating to the EU are helpful to sentiment.

Key risks include the growth of protectionism and other geopolitical events that have the potential to spark a prolonged global recession.

Europe

Interest in Europe appears to be turning more positive as investors question the end of US exceptionalism and various significant, pro-active European fiscal developments drive a pick-up in regional growth expectations. 

While valuations across European markets have broadly responded positively to this shift, there are still some extremely interesting valuations both at the sector and individual company level, which a fundamentals-based stock picking approach can exploit. 

We look for opportunities where positive change has been mispriced by the market and, while we manage balanced portfolios across all sectors, we see excellent long-term return potential in areas including basic materials, energy, utilities, and banks.

Key risks in the near term include US tariffs and China, but these are largely already reflected in valuations, in our view. 

Asia and Emerging Markets Equities Team

After a period of strong performance, Asian equity market valuations are no longer depressed, but they remain reasonable, and we believe there is scope for the wide discount at which they trade relative to US peers to be narrowed. Asian equities currently offer double-digit earnings growth, while a weaker US dollar has historically been a positive catalyst for Asian & EM assets. For investors seeking diversification and long-term value, Asia presents a powerful case for inclusion.

Asia offers strong investment opportunities, including leading tech and manufacturing firms in North Asia, fast-growing consumer and e-commerce sectors in India and Southeast Asia, and exposure to rising incomes through robust financial institutions. The region also plays a key role in global supply chains for AI, renewables, batteries, and commodities.

Dividends have long been an important driver of total returns for Asian equities, but policy-driven improvements in South Korea and China – two key markets for the region – have raised expectations for further progress, with a growing number of companies paying better dividends, buying back shares and generally adopting more shareholder-friendly practices, enhancing their appeal to global investors.

While geopolitical risks, such as US trade tariff policies, remain a concern, many Asian companies have strong balance sheets and competitive advantages that may support resilience. If global trade shifts away from China, other Asian economies could benefit, boosting intra-Asian trade.

Global Equities Team

The key advantage of investing globally is the breadth of the opportunity set. For active managers, there is an enviable choice of stocks across sectors and geographies. At any given time, there will always be areas of the market that are out of favour.

We can exploit this by finding those companies where sentiment is against them in the short term, perhaps for geopolitical reasons, but the long-term fundamentals of the business remain intact.

Investing globally can also help manage risk. Some regional markets are more exposed to specific sectors or industries. By investing globally, we can ensure that we can manage style and factor risks to ensure a diversified portfolio.

Even within a global portfolio, you can still be exposed to themes or market fads. By focusing on valuation and employing a range of risk management tools, such as correlation analysis, we can offset these risks.

US opportunities in focus

We see significant upside potential in regional banks and healthcare, with attractive long-term prospects in HMOs, select consumer staples, and a few high-quality media names.

We continue to favour communication services and technology stocks, which we believe will gain market share in advertising and benefit from advancements in artificial intelligence initiatives.

We believe market volatility may continue into 2025, given economic uncertainty related to the new White House Administration’s fiscal policies (effect of tariffs), along with sanctions (Iran, Russia, and China) and ongoing conflict in the Middle East and the Russia/Ukraine war.