Is Now the Time to Jump In or Stay Away from Asia Markets?

According to several analysts over at The Telegraph, the stock markets of China, Hong Kong, India, and Japan markets are currently “cheap.”

(It was also noted that those of Indonesia, Pakistan, and Sri Lanka should have investors weary.)

Using three valuation indicators, these analysts were able to assess which markets were bargains and which markets were way overvalued. The indicators chosen were price-to-earnings ratio (p/e), cyclically adjusted price-to-earnings ratio (cape), and price-to-book ratio (p/b).


As has been reported recently, the United States came in at the most expensive. This really shouldn’t be that much of a surprise to anyone who pays attention to this type of thing, though.

The cheapest market? Well, that honor went to Greece. I imagine this is also not that much of a surprise considering its recent economic shocks. Following close behind Greece was China.

For a market to be labeled “cheap,” it had to be trading below its own historic valuation across all three measures. Greece is an obvious one, but some may pause upon seeing China, India, and Japan.

China and India (for a variety of reasons) have recently scared money away, and Japan has disappointed investors for decades. Many consider them economic “basket cases.”

But Japan has been busy printing money to try and inflate its economy (stock market), so purely on a stock market basis it looks to be a no-brainer for the near term.

Indonesia is labeled “expensive” because it is trading on valuations that are higher than their historic averages, but many (myself included) believe that Indonesia (Southeast Asia’s largest economy) is still a great long-term buy. Hot money has poured into Indonesia as of late, mainly on a fundamental basis, because of President-elect Joko Widodo, and newly elected governor of Jakarta, Basuki Tjahaja Purnama—the first (arguably) ethnic Chinese and Christian ever elected to office. Both leaders are considered reformers and pro business.

Although Indonesia’s economy has struggled recently—e.g., GDP grew its slowest in five years at 5.01% in the third quarter from a year earlier, shrinking prices for commodities and hurting producers—the newly elected government there is still in its infancy, with many investment projects still on the table and reforms still at the starting gate.

Thailand is apparently sitting on the edge of “expensive,” too. More than likely due to money flooding in after the military coup earlier this year which curtailed protests and sparked enthusiasm from local businesses and the tourist industry.

For more details on other markets (and to better understand the ratios used), suggest you head over to The Telegraph and read more.