(Reuters] – Asian equities fell to a low of 17 months at the close of October, mainly due to worries about China’s economy. Analyst upgrades to earnings estimates also failed to improve equities in this year.

Refinitiv Eikon reported that at October’s end, the 12-month forward price-to-earnings (P/E), MSCI Asia-Pacific index, fell to 14.59, its lowest point since May 2020.

The MSCI Asia Pacific Index has lost 0.6% in comparison to the MSCI United States’ gain of 24.5%, and’s 17.4%.

Nomura stated that Asia’s performance was below the U.S. again because of local factors. However, major central banks are still reinforcing the message about slow and gradual policy normalization.

(For graphic on MSCI Asia-Pacific and World index’s PE: https://fingfx.thomsonreuters.com/gfx/mkt/lbpgnbomqvq/MSCI%20Asia-Pacific%20and%20World%20index’s%20PE.jpg)

The analysts predicted a turnaround and continued earnings improvements for Asian stocks last year.

The analyst upgrades this year have not helped to increase regional stock.

SocGen reported last month that “strong earnings in the past 2 quarters failed to excite markets because forward EPS estimates had stagnated following a V-shaped recovery.”

(For graphic on Breakdown by country for estimates changes in last 30 days: https://fingfx.thomsonreuters.com/gfx/mkt/klvykdzlgvg/Breakdown%20by%20country%20for%20estimates%20changes%20in%20last%2030%20days.jpg)

According to Asian businesses that have submitted earnings, 51% of them have failed to meet their forecasts. That’s compared to the global average of 40%.

The data revealed that South Korean, Chinese, and Hong Kong shares were among the most affordable Asian stock options, with P/E ratios 10.3, 10.5, and 10.6.

(For graphic on Valuation of Asia-Pacific equities: https://fingfx.thomsonreuters.com/gfx/mkt/zjvqkwemwvx/Valuation%20of%20Asia-Pacific%20equities.jpg )

The data revealed that the forward P/E of MSCI Asia-Pacific was higher than the 10.03 median.

Capital Economics released a report saying that “we don’t believe the low valuations for emerging market (EM), equity indices (DMs), is reason to expect EM equities outperform the next couple years.”

We believe that China’s slowdown in economic growth is likely to continue, even though the economic growth of developed countries remains strong.

(For graphic on MSCI Asia-Pacific index’s estimates change: https://fingfx.thomsonreuters.com/gfx/mkt/egvbkamekpq/MSCI%20Asia-Pacific%20index’s%20estimates%20change.jpg)