Article 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.

Views from the UK & European Equities team

• European equities continue to offer compelling value. Despite expectations for approximately 20% earnings growth this year, valuations remain reasonable by historical standards, particularly in sectors such as banks, industrials, and technology where profit forecasts are still rising.
• The investment backdrop for Europe is improving with leading macroeconomic indicators such as new orders and PMIs pointing to a broadening economic expansion, largely driven by the German fiscal stimulus and significant regional investment in areas such as data centres, AI infrastructure, defence, electrification, and power grids.
• Reports reveal that European earnings have been far more resilient to the challenges of 2026 than they would have expected at the start of the year; this resilience is driven by the combination of the various regional stimulus packages and also the relatively low levels of leverage in the system, both at the corporate and household level.  We expect that resilience to continue.
• Bond yields have become a drag on European valuations recently, but fundamentals remain supportive and we believe that the increased breadth of economic activity together with the diversification that Europe offers will drive increased fund flows into the region and so support share prices going forward.
• The UK stock market currently remains among the cheapest major equity markets in the world, with many high-quality companies trading at discounts to global peers despite comparable profitability. The fact that the UK now represents just 3% of global market value, its lowest share in five decades, and continues to attract strong overseas takeover interest highlights the valuation opportunity available to long-term investors.

Explore related funds

• Invesco UK Equity Fund
• Invesco Pan European Equity Fund
• Invesco Euro Equity Fund

Views from the European team

• Interest in Europe has been turning more positive as investors question the end of US exceptionalism and various significant, pro-active European fiscal developments driving 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.
• The key risk is of a potential long-term increase in energy prices as a consequence of the conflict in the Middle East and which could drive a global recession. 
• However, Europe as a region is in a far stronger position today relative to other regions than it has been since the Global Financial Crisis — there is fiscal support and room for further fiscal expansion, household balance sheets are also strong and there has been a pickup in investment activity.

Views from the Asia and Emerging Markets Equities team

• Emerging market (EM) equities have rebounded strongly in recent years from depressed level, but in aggregate remain attractively valued relative to developed markets, with significant dispersion across countries and sectors, reinforcing the importance of stock selection.
• In South Korea and Taiwan, the best performing markets over the last 12 months — there are still some attractively valued companies. However, rising valuations at the broader market level warrants some caution. The same can be said about Asian semiconductor stocks: while we retain significant holdings in high quality industry leaders, strong performance has left valuations more demanding, prompting us to trim positions.
• India no longer trades at premium, reflecting near-term headwinds for the economy given a dependence on imported energy and disruption to energy supply chains through the Strait of Hormuz. The key question is whether consumption growth can reaccelerate (with Goods and Services Tax cuts, interest rate cuts and other stimulus measure having been seen last year), with a recovery in private sector capital spending long overdue.
• China still trades at a discount to its long-term historical average, largely due to ongoing concerns around the property sector, regulatory uncertainty, and subdued consumer confidence. However, the valuation of Chinese consumer-related stocks reflects a more pessimistic outlook than we think likely, leaving plenty of room for upside even under modest recovery scenarios.
• We believe valuations remain particularly attractive in Latin America, where markets trade below historical averages and offer compelling dividend yields. We are also constructive on commodities, an area that until recently was largely overlooked by investors and continues to offer some favourable valuations.
• One area that underperformed in 2025 was the so called “quality” segment of the market. While definitions of quality vary and we do not invest with a factor lens, many of the attractively valued opportunities we are currently identifying would historically have fallen into this category. These include businesses in consumer staples, health care, IT services, and selected leisure industries, where solid fundamentals contrast with valuations that remain depressed relative to their long term potential.

Explore related funds

• Invesco Asian Equity Fund
• Invesco Emerging Markets Equity Fund

Views from the 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.

Explore related funds

• Invesco Global Equity Fund