The cheapest stock markets and sectors – October 2025

Periodically I review global stock markets to see which offer good value based on historical data. The last time I did this was almost a year and a half ago in June 2024.

The chart below shows the performance of key stock markets since June 2024, with the Hong Kong stock market (Hang Seng) leading the way.

So how have the stock market moves affected stock market 'value' around the globe? In this article, I answer that question before going on to determine the value of individual equity sectors in the US. But first, let me recap on what value investing is.

What is 'value investing'

A value investor buys shares in companies that he/she believes are undervalued by the market on the assumption that when reality catches up with the company fundamentals the share price will be revalued and they will make a profit.

Finding value involves scrutinising company balance sheets and accounts looking for the value that others can’t see, the earning potential that your peers are overlooking. However, determining ‘value’ is subjective and can be hit and miss. The investment landscape is littered with investors who misread the ‘value’ signs and got it wrong. Sometimes things are cheap for a reason and get cheaper as a result. Even value investing gurus like Warren Buffet get it wrong sometimes.

The 80-20 Investor algorithm was developed based around momentum, yet ultimately encapsulates the positives of value investing. A value investor may have identified a fund previously, yet will be waiting for the market to catch on. When it finally does the share price will go up, climbing up the share performance tables. At this point 80-20 Investors will buy it and ride the wave upwards.

Yet, the biggest drawback of value investing is finding simple reliable information with which to determine 'value'.

The best measure of 'value'

There is a wide range of measures that can be used to help determine a company's value yet perhaps the most reliable measure, and the one I favour, is something called the Cyclically Adjusted Shiller P/E (or CAPE for short).

It is a measure of value created by Nobel prize-winning economist Robert Shiller and received much attention when it effectively predicted the US stock market crash of the late 1990s.

In a nutshell, the CAPE measure looks at the price of a share compared to its earnings ability over the last 10 years. The bigger the number the more expensive (poor value) the share is while the lower the CAPE the cheaper (better value) the share is.

You can even use the CAPE for entire stock markets to get an overall measure of how expensive the market is, much like Shiller did before the stock market bubble burst in 2000. If a market is hugely expensive versus history then it could be a sign of an impending market correction. Similarly, if a market is cheap it could be a sign of better days ahead. It all hinges on the market reverting back and forth across a historic median. The CAPE is sometimes also used to predict future returns for stock markets based on history, although that has to be taken with a pinch of salt.

However, it's not just about how big or small the CAPE figure is but how it compares to the market's (or company's) long term median. So you can see although it is a relatively simple measure, getting hold of the information is difficult.

Yet you must bear in mind CAPE is not a crystal ball. Ten years ago the US stock market had a CAPE of 27.74, well above the long term average of 16.5. This made US shares eye-wateringly expensive and implied an expected annual return of less than zero over the next few years, or in other words that it would lose investors money. However, as we know the US stock market CAPE eventually hit 38.7 in October 2021 and remains elevated. This hasn't stopped the US stock market hitting new all-time highs as recently as a few days ago . Therein lies the problem with value measures and is why I may only use CAPE to help guide my decisions, rather than being the sole basis upon which any decision is made.

The cheapest stock markets in the world

The table below summarises the CAPE values for stock markets around the world. The table is in alphabetical order. However, I have highlighted in green those markets that are cheaper than their historical median, while those that are more expensive are in red. I have also included the CAPE for each market as at June 2024 when I last reviewed the value of global stock markets. The "June 2024 CAPE" column is colour coded with reference to the Median CAPE value that was applicable back in June 2024. I have also included an inception date for each market which states the date from which data has been available. Clearly, the older the inception date the more robust the analysis is, which has always been a snag when using CAPE for emerging markets where historical data is limited.

 

Market	Current CAPE (Oct 2025)	June 2024 CAPE	Median CAPE	Inception Date
Australia	19.8	17.4	16.8	1969
Brazil	9.4	9.8	13.6	1994
Canada	24.5	20.4	19.6	1969
China	14.9	10.2	15.0	1995
France	21.1	23.2	19.7	1971
Germany	19.2	15.9	17.4	1969
India	34.5	35	22.4	1994
Indonesia	13.6	15	19.1	1992
Italy	19.5	19.3	18.4	1984
Japan	23.1	23.8	31.5	1969
Malaysia	14.6	14.1	19.6	1992
Mexico	16.6	16.5	21.4	1992
Poland	10.2	9.8	11.1	1995
South Africa	18.1	13.5	18.0	1995
South Korea	14.2	12.5	14.2	1995
Spain	18.6	15.6	14.2	1980
Sweden	18.6	18.8	19.8	1969
Switzerland	22.1	22.4	21.5	1969
Taiwan	28.3	25.2	20.3	1995
Thailand	14.2	14.1	17.4	1992
Turkey	7.8	10.5	10.6	1992
US	38.2	34.1	16.5	1871
UK	15.9	14.9	14.7	1969

 

Regional Summaries

Market	Current CAPE (Oct 2025)	June 2024 CAPE	Median CAPE
Emerging Markets	17.6	15.0	15.0
Europe	19.0	18.7	17.0
Global Developed	30.8	28.9	24.1

Stock market value changes since June 2024

Below I highlight some of the key trends:

• Generally developed markets have become less attractive, while several emerging markets are becoming more attractive from a value standpoint.
• Cheaper markets offer value: A significant trend is the number of markets that have become cheaper. Of the 23 markets analyzed, 8 have seen their CAPE ratios fall since June 2024. Turkey stands out with a dramatic drop from 10.5 to 7.8, making it the cheapest market by a significant margin. Perhaps that should not come as a surprise given Turkey's rampant inflation and unorthodox economic policies which have decimated the lira's value, scaring off foreign investors and depressing valuations. Meanwhile, Brazil, Indonesia, France, India, Japan, Sweden and Switzerland have also become less expensive.
• Most expensive markets: The US continues to be the most expensive market, with its CAPE ratio climbing to 38.2. India, despite becoming slightly cheaper, remains the second most expensive market at 34.5. Spain, the UK and Taiwan have also become notably more expensive.
• Significant flips in valuation: South Africa has flipped from being historically cheap (green) in June 2024 to now being slightly expensive (red). Germany has also moved from being cheap to expensive relative to its historical median.
• China's rally: Chinese equities have seen a substantial rally (which has helped drive the Hang Seng higher), with the CAPE ratio jumping from 10.2 to 14.9. Despite this sharp increase, the market remains just below its historical median, suggesting it is still fairly valued.
• Fair value sweet spot: South Korea is trading exactly at its historical median CAPE of 14.2, indicating it is fairly valued.

On a regional basis, valuations have universally climbed, indicating broad-based market strength, particularly in developed economies.

• Global developed markets: This group has become even more expensive, with its CAPE ratio moving further away from its median value.
• Emerging markets: After being fairly valued in June 2024, Emerging Markets as a whole are now trading at a premium to their historical median.
• Europe: The continent has also become more expensive, aligning with the trend seen in its major economies like Germany and France.

Value by equity sector

It is also possible to discern which individual equity sectors are deemed good value or expensive, which could be used when choosing individual funds or comparing performance. The table below shows the value of various sectors within the S&P 500 and obviously while the data is US-specific it is generally reflective of wider trends within global equity markets. Where the current CAPE is deemed cheap based on history it is coloured green. Where it is deemed expensive the current CAPE is coloured red.

While most S&P 500 sectors are more expensive this time around, it is perhaps unsurprising that the Information Technology sector is significantly more expensive than in June 2024. It now trades at nearly double its 10-year average, after the likes of Apple as well as AI plays such as Microsoft and Nvidia rallied strongly. The table puts into context the stretched valuations of some Information Technology stocks which is causing concern within the Bank of England and the International Monetary Fund.

Other trends include:

• Consumer Cyclical sector has become significantly more expensive, with its valuation now far exceeding its long-term average.
• The Healthcare sector is a notable standout, having moved from being overvalued in June 2024 to now being undervalued compared to its 10-year average.
• Communication Services and Real Estate remain cheaper than their historical averages, even though their valuations have increased since June 2024. They represent the primary pockets of value within the U.S. market.

S&P 500 Sector	Current CAPE	June 2024 CAPE	10-year average CAPE
Basic Materials	27.8	27.6	26.8
Communication Services	42.1	36.6	43.1
Consumer Cyclical	51.2	43.9	38.1
Consumer Defensive	27.0	25.7	24.6
Energy	27.4	29.5	19.0
Financial Services	22.1	17.3	20.1
Healthcare	27.6	30.7	30.1
Industrials	32.1	28.4	23.4
Information Technology	65.1	56.8	32.8
Real Estate	43.2	40	48.6
S&P 500	38.2	34.1	31.5
Utilities	31.7	28.2	26.7

 

 

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