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.

NOTE: This post first appeared on our NEW Substack: (VIEW LINK)

Best regards,

Callum Thomas

Head of Research and Founder of Topdown Charts