Weekly Commentary - Investors favor North Asia market
Investors are moving into North Asian equity markets from South Asian markets. The move is because North Asian equities are relatively low price and companies in the region will be benefit from global economic recovery.
Countries in south Asian, including Thailand, Philippines and Indonesia, had been attractive and had risen over a double since the 2008 global financial crisis. Now, the price is high. The benchmark Philippines index is trading at 18.4 times expected earnings for the current unreported year, while Indonesia is trading at 15.3 times. However, the price of North Asian stocks is relatively lower. South Korea's Kospi is at 11 times, and the Hang Seng China Enterprises Index is at 6.9 times. Now some fund managers are overweight North Asian stocks instead of South.
In addition to asset price, economic recovery is another key factor of the moving. North Asia is highly connected with western countries, while Western countries are on the track of recovery, export in North Asian countries will be boosted. In fact, both China and South Korea posted accelerating export growth for August. However, South Asian countries are suffered from the change. Indonesia is experiencing rising inflation, while Thailand has been hit by weakening consumption and exports.
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