GRAPHIC-Asian shares' valuations drop in October to make them more attractive

By Patturaja Murugaboopathy and Gaurav Dogra
Nov 6 (Reuters) - The valuations of Asian shares based on
forward earnings dropped to a four-month low in October,
boosting the allure of Asian equity markets as the region
recovers from the coronavirus pandemic.
The forward 12-month price-to-earnings ratio (P/E) for
MSCI's broadest index of Asia-Pacific shares .MIAP00000PUS
fell to 15.9 at the end of last month, the lowest since June.
That compares with 18.3 for the MSCI World index
.MIWD00000PUS .
The forward P/E ratio values a stock based on its estimated
earnings for the next 12 months, and the ratio falls when
analysts project higher growth.
Analysts have raised Asian companies forward 12-month
earnings estimates by 1.5% over the past month, with the region
witnessing fewer numbers of COVID-19 cases and most of its
factories back in full swing.
On the other hand, the United States has seen a surge in
infections recently, and some European nations have announced
fresh lockdowns to curb the pandemic.
"The combination of improving growth, liquidity and more
reasonable valuations provide a favourable macro backdrop to
Asian equities. The attractiveness of Asian equities should also
favourably impact foreign portfolio flows and Asian currencies,"
said Sanjay Mathur, Chief Economist at ANZ.
Hong Kong, Chinese and South Korean stocks were the cheapest
in the regions with P/E ratios at 11.41 and 11.43 and 11.66
respectively, the data showed.
On the other hand, India, Japan and Australia shares were
the most expensive in the region, with P/E ratios of 19.55,
16.77 and 16.45, respectively.
"With many other countries struggling with the resurgence of
the virus, we believe capital allocators might find Asian stocks
to be attractive at this point, especially if the US dollar gets
a bit weaker post-election as expected," said John Lau, the Head
of Asian Equities at SEI Investments.
"We see good opportunities for attractively valued stocks in
South Korea and Taiwan, as well as India and Vietnam."



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MSCI Asia and World index PE https://tmsnrt.rs/34YQwOr
Valuation of Asia-Pacific equities https://tmsnrt.rs/3l0UjjB
Asia-Pacific equities performance in 2020 https://tmsnrt.rs/2I5N7nW
Asia-Pacific equities performance in Oct . 2020 https://tmsnrt.rs/2Jw7Rpq
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