Last-minute ISA? These are the world’s cheapest stock markets

Important information - tthe value of investments and the income from them, can go down as well as up, so you may get back less than you invest.

Although Wall Street is unquestionably home to many wonderful companies, some investors are nervy about its valuation even after the recent sell-off. For last-minute ISA choices, some may feel happier to invest in overlooked markets that trade at much lower valuations. Here we identify the world’s cheapest stock markets.

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We measure the cheapness of markets by the ‘CAPE’ ratio, which is a refinement of the familiar ‘price-to-earnings’ or p/e ratio. While p/e and CAPE ratios are often used in connection with individual stocks, they can also be calculated for entire stock markets. The difference between the two ratios is that the CAPE is ‘cyclically adjusted’: the earnings figures used are averages over a number of years as opposed to just one. The idea is to even out the ups and downs of the business cycle.

We have sourced the most recent CAPE ratios of some of the world’s major stock markets from Barclays. Figures are as at 28 February 2025.

‘Super-cheap’: CAPE ratio below 10

The world’s cheapest stock market, judging by its CAPE ratio, is Turkey, which is priced at 8.6 times cyclically adjusted earnings. Its shares have not always been lowly valued, however: the CAPE ratio reached almost 30 in 2006 before a plunge to 8.8 in February 2009, during the financial crisis. It went even lower, to 6.8, as the pandemic took hold in March 2020.

‘Inexpensive’: CAPE of 10–15

Only Turkey of the countries tracked by Barclays can boast a figure below 10 but several markets have a CAPE ratio in the low double digits. Brazil is at 11, Poland at 11.7 and South Korea at 12.6, while Hong Kong's CAPE is 14.1 and China’s 14.6.

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In the middle: CAPE of 15–20

In this middle-ranking group, as judged by the CAPE ratio, we have the UK at 17.1, Mexico at 17.3, South Africa at 17.5, Spain at 18.1, Singapore at 18.7 and Israel at 19.3. 

Starting to look expensive: CAPE of 20–25

Here we have Italy at 20.5, Europe at 21.6, Australia at 22.1, Japan at 22.2, Sweden at 22.3, Germany at 24.1 and France at 24.3.

Getting pricey: CAPE of 25–30

In this group we find Switzerland at 26.3, Canada at 25.5 and Taiwan at 29.9, no doubt partly because of the huge influence of Taiwan Semiconductor Manufacturing Co (TSMC).

Dearest of them all: CAPE of more than 30

It’s not only America that can boast a CAPE of 30-plus. The Netherlands’ market is at 33.2, again partly because of the influence of one tech giant, in this case the chip-machine maker ASML, while India is also at 33.2. The US stands at the very top with a score of 36.4.

While these figures may be interesting for ‘value’-driven investors, there are of course other factors to consider. Some countries’ currencies are very volatile, which can affect returns for British investors just as much as actual share price movements. Political stability is also important. And no financial adviser will recommend putting money into just a couple of cheap-looking markets at the expense of a well-diversified portfolio.

If you want to keep up with Barclays’ latest CAPE figures, visit its website here.

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How the Select 50 can help

If you’re looking to explore new regions for your ISA this year, or re-balance your existing portfolio, our Select 50 list of recommended funds can help.

Our Select 50 tool lets you filter by geographical region by clicking on the ‘Asset Class’ tab.

• Explore the Select 50 - funds selected by experts

Don’t forget you have until midnight on 5 April to secure your ISA and pension allowances for this tax year. If you are unsure which fund (or funds) to choose, you can still add cash now and decide later.

• Find out how to secure your allowances before 5 April

How to X-Ray your portfolio

A good portfolio is a balanced portfolio and this is where our Portfolio X-Ray tool can help. It will tell you the breakdown of where your money is invested by the type of asset and the geography. It will also give a breakdown of the shares that you hold and the shares your funds hold. This is a useful snapshot of your portfolio make-up, helping you to work out if you’re too invested in certain areas.

To find this, log in to your account and click on ‘account holdings report’ via a tab within the account summary page.

Once you’ve selected a benchmark to compare your portfolio against, such as ‘UK Large Cap Equity’ (Large UK companies) or ‘S&P 500’, you’ll be taken to an analysis report page. This has useful information but take one more step by clicking on ‘Export’ near the top right of the page and you will get the full Portfolio X-Ray report.

Your X-Ray report will, in a couple of pages, show you a detailed breakdown of your investments via geographical region, asset class, sector, style and more.

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