By Gaurav Dogra

(Reuters) – Asian equities saw their values fall 16 months after concerns about China’s economic slowdown and rising expectations that major central banks will tighten monetary policy dragged equity markets down.

Refinitiv data shows that the MSCI Asia-Pacific index lost 2.3% in September and that its forward 12-month PE ratio was 14.6 at Sept.

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

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

This year’s MSCI Asia-Pacific index loss has been 3.2%, as compared to the 10.3% MSCI World gain. According to Suresh Tattia, an investment strategist and senior advisor, “Asian equity markets have come under severe pressure due to China’s slow growth, the regulatory overhang on technology stocks, and Evergrande’s credit issue.” Credit Suisse (SIX) “On top, this is because of the weak growth momentum, earnings revisions will normalize.”

Last month’s 0.3% decrease in forward P/E for Asian businesses was due to manufacturing contracting.

Graphic: MSCI Asia-Pacific index’s estimates change – https://fingfx.thomsonreuters.com/gfx/mkt/egpbkyrdqvq/MSCI%20Asia-Pacific%20index’s%20estimates%20change.jpg

The biggest earnings declines of over 2.5% were experienced by Australian and Malaysian companies. China suffered a 0.3% drop in its forward earnings.

China Evergrande Group, with liabilities totalling $305 billion has raised concerns about the possibility that China’s cash crisis could spread to other countries and impact global financial systems. China’s PMI (official manufacturing Purchasing Manager’s Index) dropped to 49.6 in September from 50.1 last August. Any reading lower than 50 is indicative of a contraction.

Andrew Gillan of Janus Henderson Investors’ Asia ex Japan equities said that Asian equities are still attractive after third quarter weakness.

We are seeing stronger performances from markets outside of China that have been late in recovering from COVID-19. It is plausible to argue that this should continue in India, and other parts of South East Asia.

Graphic: Breakdown by country for estimates changes in last 30 days – https://fingfx.thomsonreuters.com/gfx/mkt/dwvkrdxwypm/Breakdown%20by%20country%20for%20estimates%20changes%20in%20last%2030%20days.jpg

Graphic: Breakdown by sector for estimates change in last 30 days – https://fingfx.thomsonreuters.com/gfx/mkt/zjpqkjrbgpx/Breakdown%20by%20sector%20for%20estimates%20change%20in%20last%2030%20days.jpg