Japan shares set to be the cheapest, U.S. costliest - Jefferies

Value ratios such as price-to-earnings and price-to-book in Japan are below their long-term averages and coupled with strong earnings will help make Japan's shares cheap, the brokerage said. "The land of the rising sun has seen pretty consistent upward earnings and sales revision with both ratios being best in class," Jefferies analyst Steven DeSanctis wrote in a note.

Shares of small- and mid-cap companies in Japan are set to be the cheapest and those in the United States the most expensive, Jefferies analysts said, against the backdrop of higher inflation and soaring commodity prices from the Ukraine crisis. Value ratios such as price-to-earnings and price-to-book in Japan are below their long-term averages and coupled with strong earnings will help make Japan's shares cheap, the brokerage said.

"The land of the rising sun has seen pretty consistent upward earnings and sales revision with both ratios being best in class," Jefferies analyst Steven DeSanctis wrote in a note. Japanese shares trade at roughly 13 times their projected earnings and 23% below their average levels, Jefferies said.

Price-to-earnings ratio measures how much investors are willing to pay for each dollar in earnings, while price-to-book measures the value that the stock market is assigning to the company compared to the accounting value. "U.S. is the one region with its price-to-book above average, and by a wide margin. Japan and Latam are the cheapest, while of course the U.S. remains the most-expensive," the note said.

Europe is expected to post the best earnings growth, but DeSanctis is less confident on this outlook due to the Ukraine crisis.