Equities compelling as long-term Asia prospects remain attractive

What started as a valuation-driven rebound following the excessive de-rating of Asian equities in late 2008 has generated additional momentum on the back of more compelling evidence of an economic turnaround.

Take the Chinese PMI as an example. June’s data announcement was the fourth consecutive month where the measure remained above 50, reinforcing the belief the manufacturing industry is expanding and the recovery is built on solid ground. Valuations also remain reasonable – despite the recent run-up – reflecting just how deeply discounted Asian markets became at the market lows in October 2008 and again in March 2009. The share price to book value per share for Asia ex Japan fell as low as 1.1 times and has subsequently rebounded to a level of around 1.6 times. This compares to a peak l...