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Asian stock valuations dip to a 21-month low -Breaking

by Mike Robinson

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© Reuters. FILE PHOTO – A man can be seen standing behind an electronic display board that shows the Nikkei Average and Japanese yen rates against the U.S. Dollar at Tokyo Stock Exchange, Tokyo, Japan on October 11, 2018. REUTERS/Issei Kato

By Gaurav Dogra

(Reuters] – Asian equities’ values fell to a 21 month low at January’s end, due to increased expectations for aggressive Federal Reserve tightening and a spike in U.S. bonds yields. The forward 12-month PE ratio of the MSCI Asia-Pacific index was 13.49 at last month’s end, Refinitiv data revealed. This is the lowest P/E ratio since April 2020.

Compare this to the 17.24 % P/E ratio.

GRAPHIC – MSCI Asia-Pacific & World index’s PM

https://fingfx.thomsonreuters.com/gfx/mkt/gdvzynnjypw/MSCI%20Asia-Pacific%20and%20World%20index’s%20PE.jpg

A rise in U.S. yields caused money outflows, leading to large declines in regional shares. In January, the MSCI Asia-Pacific index lost 4.4%. This is its worst start in six years. China dropped 7.6% in January, and its forward PE ratio fell to 10.18. It is Asia’s lowest.

GRAPHIC-Valuation of Asia-Pacific Equities

https://fingfx.thomsonreuters.com/gfx/mkt/lgvdwxamlpo/Valuation%20of%20Asia-Pacific%20equities.jpg

Tech companies in South Korea, Taiwan and Taiwan suffered large losses as a result of a rise in bond yields. The forward 12-month price/e stood at 10.34 & 13.33, respectively.

However, Indian shares had the highest forward price per share of 20,42.

Analysts say that Asian equity is attractive at these levels.

Suresh Tita, Senior Investment Strategist at Credit Suisse (SIX 🙂 Asian stocks’ valuation has fallen and they are trading at a lower price than global equities.

His outlook was for a more than 9% increase in earnings this year, supported by another above-trend year’s GDP growth. He said that he still expected positive returns to the medium term.

Anthony Raza of UOB Asset management, who heads multi-asset strategies, stated that the Asian market has been extremely strong with economic flows making Asian stocks more desirable.

We have been overweight Asia in the last three quarters but we are back at normal weight. They are expected to improve on their performance in the past.

GRAPHIC-Sector breakdown for Asia-Pacific equity’s valuations

https://fingfx.thomsonreuters.com/gfx/mkt/klvykmbakvg/Breakdown%20by%20sector%20for%20Asia-Pacific%20equities’%20valuations.jpg

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