June 2 (Reuters) - Asian stocks' valuations hit 10-year
highs at end-May, tracking the rally in global shares, as
businesses started to reopen across the region after shutting
down to curb the spread of the coronavirus and as central banks'
boosted stimulus measures.
The MSCI's broadest index of Asia-Pacific shares
.MIAP00000PUS gained about 1.8% last month, and the index's
12-month forward price-to-earnings (P/E) ratio was at 14.34, the
highest since April 2010, according to Refinitiv data.
At the same time, the MSCI's gauge of stocks across the
globe .MIWD00000PUS climbed 4.2%, lifting its P/E ratio to
18.39, the highest since at least June 2003.
Vietnamese .VNI and Japanese .N225 stocks led Asia on
price gains last month, climbing 12.4% and 8.3%, respectively.
The rally in Asian shares was due to factories and
businesses starting to reopen after months-long lockdowns in
most parts of the region, analysts said. Zealand, Australia and Malaysia shares were the most
expensive in the region, with P/E ratios of 23.84, 17.44 and
17.23, respectively.
However, some analysts doubt the sustainability of the price
rally, which is based on expectations of a V-shaped recovery,
and say the corporates are unlikely to start recovering
immediately.
"A good segment of markets being lifted out of “bear”
territory, is subject to a great deal of uncertainty," Vishnu
Varathan, head of economics and strategy at Mizuho Bank, said in
a report.
"Critically, re-emergent US-China threat, risk of a second
wave of infections and precautionary cash conservation by the
private sector shaken up by the pandemic and wider
uncertainties, may dampen and retard a fuller recovery," he
said.
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Asian equities' May performance https://tmsnrt.rs/3dnn1aG
Asian equities' 2020 performance https://tmsnrt.rs/2Xo4429
MSCI Asia and World index PE https://tmsnrt.rs/2TYMbEI
Valuations of Asian equities https://tmsnrt.rs/2Xre3no
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