three expert views on asia stock valuation

Asian stocks may look cheap, but what to make of valuations?

three expert views on asia stock valuation


It opens opens up the question over valuation. Asia is a broad region spanning diverse countries and markets. Viewpoints differ as experts watch markets in this region of the world developing.
Here the following three perspectives from Asian investment professionals:

China is crucial 

“The big question is what’s happening to stock valuations in China,” Stuart Parks, head of Asian equities at Invesco Perpetual, noted.
“What goes on in China is crucial for the region. If Chinese stocks look good the valuation for the whole region is upgraded.”
But he also added that investors don’t necessarily need China to find success stories. There are strong individual players, but to a certain extent they are influenced by China getting it right.

Below average

According to Yuming Pan, senior equity portfolio manager at Allianz Global Investors, stock valuations are low from a historic perspective. 
“If you look at Asia as a whole, global trade is below the ten-year average. There are a few exceptions such as the Philippines and potentially India.”
He also stressed that Asia is a consumer story. Particularly in China, the wealthier are getting younger defining their spending habits. 
“Chinese consumers were watching Downton Abbey before it was released in the US. They watch the show on their mobile devices with subtitles, not dubbing, to improve their English. These are the new consumers,” he said.
These new patterns of consumption are influencing valuations as older, less nimble companies listed on the index could see tougher times ahead.   


The benchmark valuations are not necessarily straight-forward indicators, according to Kenneth Lowe, portfolio manager at Matthews Asia.
“Benchmark valuations are misleading,” he said.
There are immediate valuations of specific players in the region, split out from the Asia aggregate. 
“In terms of corporate valuations, we see an all-time low in profit margins. This is a contrast to the US where these margins are approaching an all-time high,” he added. 


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