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The
MSCI Asia-Pacific index's forward 12-month price-to-earnings
ratio (P/E) stood at 12.1 at the end of last month, which was
the region's cheapest valuation since March 2020, Refinitiv data
showed.
"Concerns about earnings downgrades and rising cost of capital
have driven down valuations, though earnings estimates, we feel,
are close to bottoming out," said Manishi Raychaudhuri,
Asia-Pacific equity strategist at BNP Paribas.
Analysts downgraded the MSCI Asia-Pacific Index's forward
12-month earnings estimates by 2.97% in June, compared with a
0.85% upgrade in May.
The P/E ratios of South Korean, Hong Kong and Taiwan equities
were at 8.48, 9.94 and 10.02, respectively, the lowest in the
region.
Meanwhile, Chinese shares' P/E ratio surged to 10.08 from 9.38 a
month ago, as COVID-19 restrictions eased.
"Unlike the rest of the global economy that we expect to slow
down in 2023, China's economy/corporate earnings will likely see
a recovery aided by greater support in the form of
fiscal/monetary policies," said Nomura in a report this week.
The Shanghai Composite Index gained 6.66% last month, despite
the MSCI Asia-Pacific index and the MSCI World index's steep
losses of 6.78% and 8.44%, respectively.
The P/E ratios for Indian, Thai and Malaysian equities stood at
18.02, 14.54 and 13.71, respectively.
"The fact that Asian earnings estimates have already been
downgraded, and therefore are likely to remain relatively stable
relative to their DM counterparts, convinces us that the "cheap
looking" valuations are actually cheap," BNP Paribas'
Raychaudhuri said.
(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in
Bengaluru; Editing by Sherry Jacob-Phillips)
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