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

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By Reuters
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   -   Copyright  Francis Mascarenhas(Reuters)

(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

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

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

(Graphic: Asia Pacific equities performance in 2019

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