The table below presents the price-to-earnings (P/E) ratios of the world’s largest stock markets, based on their respective benchmark equity indices. It includes both trailing and forward P/E ratios for each country. Based on both trailing and forward looking multiples, India and the U.S. are the most expensive markets at the moment. Among the largest economies, South Korean stock market is looking the most undervalued, although the low multiples of South Korean equities are easily justified.

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Global P/E (Price-Earnings) Ratios by Country

* EPS (earnings per share) in the table above has been indexed to start from the base value of “100” in January 1, 2020. The EPS reflects the aggregate earnings of a country’s benchmark equity index.

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Valuations of Global Stock Markets in 2025

• United States: The most consistent story of the global equity markets over the past years has been the outperformance of U.S. compared to all other developed or emerging stock markets. The U.S. stock market continues to exhibit high valuations, driven by strong corporate earnings and investor confidence. However, concerns about overvaluation, particularly when it comes to the Magnificent 7 companies, persist.
• Europe: European stocks have started the year 2025 strongly which has surprised most investors. This surge is attributed to valuation gaps and potential positive catalysts, such as easing geopolitical tensions and favorable fiscal policies. Despite these gains, long-term sustainability remains uncertain due to structural challenges.
• United Kingdom: The FTSE 100 reached a new all-time high in February 2025, despite the UK’s economic challenges. This performance is linked to the fact that only 22% of FTSE 100 companies’ revenues are generated in the UK, with significant contributions from North America and the Asia-Pacific region. A weaker pound has also benefited companies with earnings in dollars and improved the competitiveness of UK exporters.
• Australia: Australian companies are facing a crucial earnings test to justify their high valuations, with the ASX200 trading at over 18 times future earnings, significantly above its decade average. Analysts warn that there is little room for error, and high valuations may not be sustainable if earnings disappoint.
• Emerging Markets: Investors are reevaluating strategies in emerging markets like China and India. Despite China’s rapid GDP growth and lower starting valuations, its stock market performance has been miserable compared to India’s equity market. India’s stock market has produced steady returns since the COVID crash, although the end of 2024 and beginning of 2025 has been difficult for Indian equities.

Trailing & Forward Price-Earnings Ratios

Price-to-earnings ratio is maybe the most fundamental metric used by investors when both individual companies and markets as a whole are evaluated. The ratio is easy to understand and calculate but the problem arrives when it’s time to select which earnings should you actually use. When you are using trailing earnings (earnings per share over the previous 12 months) you can be fully confident with your analysis as you are using actual figures instead of expected earnings which might turn out to be too optimistic or pessimistic.

However, investing is all about predicting the future and the phrase “past performance is no guarantee of future results” is one of the oldest clichés of the investing game. Stock analysts are generally quite accurate with their earnings projections when economic conditions are steady. However, when a recession hits a country, all predictions fly out of the window as analysts and economists are always working with linear models which never forecasts a recession.

When using trailing figures, you also need to make the choice whether you are using net income or operating income as your earnings. If you choose to use operating income, you will exclude certain expenses like taxes, interest expenses and nonrecurring items, such as expenses related to lawsuit settlements and asset write-downs. The ratios in the table above are calculated using net incomes that take account taxes and interest expenses. Also, negative earnings have been included in the calculations.