European and emerging market equities offer the best value plays among global stock markets suggests BCA Research in a new research note.

“Despite the strong equity bull run since March 2003, most markets are cheaper (on a P/E basis) today than at the start of the rally. This is the result of an even more robust recovery in earnings following the unusually harsh profit downturn in 2001-2002,” it says.

It notes that both Germany and the Netherlands for example, are among the major equity markets with the lowest 12-month forward P/E ratio, and those that are cheapest relative to their 10-year averages, “reinforcing that euro area stocks offer compelling value”.

Brazil and Korea have the lowest P/E ratios, while Japan sells at the biggest discount to its historical average, it notes. “With the exception of Japan, these value plays correspond with our global equity strategy: we recommend overweight positions in emerging markets and the euro area,” it concludes.