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As a follow up to my Global Market Heat Map post, we will dive a little deeper into specific countries.

It should come as no huge surprise that the five cheapest global markets - as ranked by P/E, P/S and P/B - are all located in developed Europe. In fact, they are the PIIGS with Hungary swapped for Ireland. How about PHIGS (figs)?

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Just because these markets are cheap doesn’t mean they can’t get cheaper however depending on your view on the European sovereign debt issue these markets may offer some value. A short euro ETF (NYSEARCA:EUO) could be used to offset the currency risk to US investors leaving the main macro risk further slowing due to increased government austerity measures.

Portugal, Greece and Hungary do not have ETFs that target their specific markets directly, so any exposure would need to be through a broad ETF like iShares MSCI EMU Fund (NYSEARCA:EZU) for Portugal and Greece and MSCI Emerging Markets Eastern Europe Fund (NYSEARCA:ESR) for Hungary. For Spain, the iShares MSCI Spain Fund (NYSEARCA:EWP) could be used, and for Italy, the iShares MSCI Italy Fund (NYSEARCA:EWI).

A foray into the markets of the developed European PHIGS is not for the faint of heart. Further dislocation is definitely a possibility as over-indebted countries deal with deficits and all of Europe attempts to figure out how to make a monetary but not fiscal union work. That said, do your homework and Europe may be hiding some contrarian investment opportunities.

The World Valuation Heat Map is also below.

Source: The 5 Cheapest Global Equity Markets