Some countries have low P/E ratio, while other, by contrast, high. But this does not mean, that some countries are more attractive for investors, then other. So this simple compare may be useless. Actually, countries have different P/E ratios, but also they have different interest rates.
Let's follow the "FED" model. This comparison is more adequate. So, P/E ~ 1/r, where r is 10 year Government Bond yield. Or (P/E)*r=k, where k is adjustment coefficient. In general, Lower k may indicate cheaper equity market (under-priced or troubled). At least, lower k (k<1) means that stock price is less then it's theoretical value.
What about GDP expectation?
OK. Let's include this parameter in our model. Actually, you don't find any strong relationship between GDP and P/E (or r*P/E) on historical data. However, higher GDP indicates stronger economics. Hence, higher GDP may indicates more attractive environment of country's equity market.
Thus, most attractive countries correspond to points at the bottom-right on diagram (see below). Conversely, overvalued markets at the background of weak GDP situated top-left on figure. Data and data sources.
Conclusion: obviously, China (GXC, FXI, PGJ) is leader. Chine will stay leader, even GPD forecast reduce to 6%. Hong-Kong (NYSEARCA:EWH) and Singapore (NYSEARCA:EWS) are another most atractive countries. Concerning India (INDY, INP, PIN, EPI), I am not assured: strong GDP forecast, but equity market is overvalued. Brazil (NYSEARCA:EWZ) also have most overvalued k ratio and 5.5% GDP. Canada (NYSEARCA:EWC), USA (NYSEARCA:IWV) and Russia (NYSEARCA:RSX) are somewhere in the middle of our rankings. So I don't find Russian Markets very attractive. Switzerland (NYSEARCA:EWL) and Germany (NYSEARCA:EWG) are most preferable in Europe.
Disclosure: Cut long RSX