We all know that UK shares are currently undervalued compared to companies listed in other countries, especially in booming New York. But Goldman Sachs really shows how budget-friendly!

According to the bank’s analysts, shares at London Stock Exchange are now sold at a 52% discount to their US counterparts. For some sectors it is even higher. Yes.

A disturbing trend

I won’t go into details about how this happened (an entire book could be written on this subject). But the elderly phrase: “The US innovates, Europe regulates“, I think it gets to the heart of the matter.

In brief, excessive regulation and taxation (especially stamp duty on UK share purchases) leads to reduced liquidity, which can lead to lower valuations.

The consequences are alarming. In 2024, 88 companies withdrew or moved their main listings from the London main market, but only 18 took their place. Bloomberg says this will be the year with the highest number of stock withdrawals in the UK since 2010.

Equipment rental company Ashtead Group is the last to say goodbye to London in favor of New York. Named after a village in Surrey, England, it will even change its name to Sunbelt Rentals.

Smarter heads are needed

Some reforms have been introduced, but more will undoubtedly be needed. Wise – a true fintech innovator listed on the London Stock Exchange with a market capitalization of £10.5 billion that debuted in 2021 – is not even in FTSE100!

From what I understand, Wise must actively apply for a up-to-date category that ensures it meets improved and stringent regulatory requirements. Maybe he doesn’t even bother with the paperwork to join Footsie.

Unfortunately, I think it will take a bigger fish than Ashtead for policymakers to actually start taking this issue seriously. If the oil giant Shell (the UK’s second largest listed company) has raised the bar, which would likely mark a turning point.

Shell often traded at a discount to U.S.-listed companies. Meanwhile, Donald Trump promised that “drill, baby, drill“, there, while Europe is heading the other way. Therefore, in the long term, the United States seems to me to be a logical move for Shell and its shareholders.

Lots of possibilities

Of course, a company’s potential for global expansion depends primarily on its strategic vision and competitive position, and not on the place where it is listed.

The flip side of all this is that there are almost certainly plenty of opportunities in the UK market right now.

One stock that I think is very undervalued right now is the company JD sports fashion (LSE:JD). The share price has fallen 41% since the beginning of the year.

Like most retailers, JD Sport was hit by weaker consumer spending. And problems with growth in Nikeher key partner, certainly didn’t assist. Nike products typically have higher margins, so the U.S. sportswear giant’s continued weakness remains a concern.

However, the company’s stock is currently trading at a forward price-to-earnings (P/E) ratio of 6.6. It’s true that there are consumer spending and Nike-specific risks, but this rock-bottom valuation seems far too budget-friendly to me.

The company has a very powerful brand, a profitable business and a growing global (and online) presence. And strategic partnerships with Nike and Adidas provide him with a competitive advantage over his rivals.

I think this incredibly budget-friendly FTSE 100 share is worth considering for 2025 and beyond. I recently added some JD Sports shares to my own ISA.