Chart of the Week - Asian Equity Valuations
Chart of the Week - Asian Equity Valuations
This week: Inflation, Credit Spreads, US Dollar Outlook, AEJ Equities, EM ex-Asia Equities, Treasuries, EMFX and emerging markets...
Check out the full archives of the Chart Of The Week for more interesting charts.
Chart of the Week - Asian Equity Valuations
Price to Book Discount: The price to book ratio for Asia Ex-Japan equities has dropped to among the cheapest readings of the past 2 decades.
Indeed, Asian equities are among the few places where valuations have made the full journey from expensive to cheap. Aside from the price-to-book-ratio, our blended PE ratio (combined: forward, trailing, PE10 ratios) went from notably expensive to now extremely cheap.
The price to book ratio also performed a similar round trip (and is sitting materially below that of the global p/b ratio — which I would note is skewed higher by the USA, which remains expensive despite an initial reset).
On face value it looks like a compelling valuation setup, and basically all that is required from here is a set of catalysts (and/or due dosage of patience for longer-term minded investors). Some of these catalysts are starting to fall into place, but other aspects are likely to be more of a 2023 story…
Key point: Asian equities are looking cheap in absolute and relative terms.
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Topics covered in the latest Weekly Insights Report
Aside from the chart above, we looked at several other charts, and dug into some really important macro/asset allocation issues right now:
Inflation: some progress made, but monetary easing still a long way off.
Credit: reviewing the risk indicators for credit spreads outlook.
US Dollar: thinking about how to think about the US dollar setup.
AEJ Equities: review of value and macro factors for Asian equities.
EM ex-Asia Equities: more background to another interesting EM subset.
Treasuries: important macro considerations given Treasury yields on the move.
EMFX: review of EMFX setup, how it ties in with EM/Asian assets in general.
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Thanks for your interest. Feedback and thoughts welcome.
Sincerely,
Callum Thomas
Head of Research and Founder at Topdown Charts
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