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Asian stocks' valuations hit 20-month high in October - Refinitiv data

Asian stocks' valuations hit 20-month high in October - Refinitiv data
A broker reacts while trading at his computer terminal at a stock brokerage firm in Mumbai, India, December 11, 2018. REUTERS/Francis Mascarenhas/Files -
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Francis Mascarenhas(Reuters)
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(Reuters) – Asian stocks saw a rise in valuations in October as equities surged on signs that Washington and Beijing were nearing a truce in their 16-month-long trade war amid upbeat third-quarter earnings by heavyweights.

MSCI’s broadest index of Asia-pacific shares <.MIAP00000PUS> rose more than 4% in October, pushing its 12-month forward price-to-earnings ratio to a 20-month high of 13.6 times by October-end. The ratio stood at 13.1 at the end of September.

(Graphic: Valuation of Asian equities https://fingfx.thomsonreuters.com/gfx/mkt/12/8213/8144/Valuation%20of%20Asian%20equities.jpg)

U.S. President Donald Trump announced a “Phase 1” trade agreement on October 11, and has said he hoped to sign the deal with China’s President Xi Jinping in November at a summit in Chile.

A better-than-expected earnings performance for Asian firms also boosted the regional shares last month. Asian companies topped the average earnings estimates by about 5.5% in the third quarter, as per Refinitiv.

Due to the rise in the P/Es, regional shares are catching up with the valuations of their global peers, Refinitiv data showed.

(Graphic:MSCI Asia and World forward PE https://fingfx.thomsonreuters.com/gfx/mkt/12/8212/8143/MSCI%20Asia%20and%20World%20forward%20PE.jpg)

India and Malaysia were the most expensive in the region, with ratios of 17.22 and 15.95, respectively.

Meanwhile, China, Hong Kong and South Korea were the lowest-cost shares in the region, with P/E multiples of about 9.55, 11.17 and 11.3, respectively.

In October, Japan <.N225>, Taiwan <.TWII> and Singapore <.STI> shares rose 5.4%, 4.9% and 3.5%, respectively.

Losses in the region were led by Thailand <.SETI> and New Zealand <.NZ50>, which dropped 2.2% and 1.3% respectively.

(Graphic: Asia Pacific monthly price change – Oct 2019 https://fingfx.thomsonreuters.com/gfx/mkt/12/8055/7986/Asia%20monthly%20price%20change%20-%20Oct.jpg)

(Graphic: Asia Pacific equities performance in 2019 https://fingfx.thomsonreuters.com/gfx/mkt/12/8054/7985/Asia%20Pacific%20equities%20performance%20in%202019.jpg)

(Reporting by Gaurav Dogra and Patturaja Murugbaoopathy in Bengaluru, Editing by Sherry Jacob-Phillips)

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