The World’s Cheapest Markets? 4 ETFs for Asia
While investors today pay roughly 19 times expected earnings for U.S. stocks, there are exchanges in Asia where the same earnings cost less than half as much. But a low multiple alone does not mean a good deal. Some discounts reflect the peak of the semiconductor cycle, while others stem from the threat of removal from emerging-market indexes or a long-term outflow of foreign capital. Which Asian markets are truly cheap, and where is it more of a trap?
Key points
While U.S. stocks trade at roughly 19 times expected earnings, some Asian markets have P/E ratios below 6. Does that mean an extraordinary investment opportunity, or is there a fundamental problem behind the low valuation?
Two Asian ETFs gained nearly 70% over the past year, while two others lost 15% to 40%.
One of the world’s cheapest stock markets could face a decision that would trigger an outflow of billions of dollars in foreign capital. Its ETF lost more than 40% over the past year and offers a dividend yield of 3.7%.
Another ETF trades at just five times expected earnings, even though its largest companies are benefiting from record demand for AI chips. The problem is that almost half of the portfolio consists of just two companies.
One of the world’s fastest-growing large markets is down sharply on the stock exchange this year, while another offers faster expected earnings growth than the U.S. at a lower valuation.
The valuation gap between the U.S. market and the rest of the world has been one of the most frequently cited arguments in recent years. According to data, the S&P 500 index traded at 19.1 times expected earnings for the next 12 months at the beginning of October (Earnings Insight, FactSet). Many Asian exchanges trade at a fraction of that multiple, even as their companies report record profits and their economies grow faster than the U.S. economy.
But 2026 has shown that a country’s low valuation can have very different causes. Some markets are cheap because investors doubt that today’s record earnings are sustainable. Others are cheap because foreign investors have lost confidence in the quality of regulation and liquidity. And in still others, valuations have simply returned to average after years of premium pricing as sentiment has shifted. For investors considering geographic diversification beyond the U.S., distinguishing between these causes is key.
We look at 4 of the most liquid ETFs tracking major Asian markets and ask why each one is valued the way it is.