Asian stock valuations fall to lows for the first time in 21 months

The valuation of Asian equities fell to a 21-month low at the end of January as expectations of aggressive policy tightening by the Federal Reserve and sharp rises in US bond yields hit regional equities. According to Refinitiv data, the MSCI Asia Pacific Index’s 12-month price-earnings ratio was 13.49 at the end of last month, the lowest since April 2020.

This is compared to the MSCI World Index price-earnings ratio of 17.24.

Last month, rising US yields prompted outflows of money from the region, which led to a significant decline in regional stocks. The MSCI Asia Pacific Index fell 4.4% in January, making the worst start in a year in six years. China’s Shanghai Composite Index fell 7.6% last month, lowering its price-earnings ratio to 10.18, the lowest in Asia.

Equities of South Korean and Taiwanese tech companies also faced significant losses due to sharp rises in bond yields, with 12-month futures P / E at 10.34 and 13.33, respectively.

Meanwhile, Indian stocks were the highest in the region with a forward P / E of 20.42.

However, some analysts said Asian stocks look attractive at these levels.

Credit Suisse’s senior investment strategist, Thresh Tantier, said Asian equities have become cheaper to value and are trading at discounted prices on global equities.

“This year’s EPS growth is expected to exceed 9%, supported by another year when GDP growth is above trend, and we still expect positive returns in the medium term,” he said. I am.

Anthony Raza, Head of Multi-Asset Strategy at UOB Asset Management, said exports in Asia were very strong and economic trends made Asian equities more attractive.

“We’ve been underweight or neutral in Asia for the past three quarters, but now we’re back in overweight Asia. Given their previous poor performance, they’re ready to catch up. think.”

By Gaurav Dogra



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