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Asian stocks' valuations hit 20-month high in October - Refinitiv data

(Reuters) - Asian stocks saw a rise in valuations in October as equities surged on signs that Washington and Beijing were nearing a truce in their 16-month-long trade war amid upbeat third-quarter earnings by heavyweights.

A broker reacts while trading at his computer terminal at a stock brokerage firm in Mumbai, India, December 11, 2018. REUTERS/Francis Mascarenhas/Files

MSCI's broadest index of Asia-pacific shares .MIAP00000PUS rose more than 4% in October, pushing its 12-month forward price-to-earnings ratio to a 20-month high of 13.6 times by October-end. The ratio stood at 13.1 at the end of September.

(Graphic: Valuation of Asian equities )

U.S. President Donald Trump announced a “Phase 1” trade agreement on October 11, and has said he hoped to sign the deal with China’s President Xi Jinping in November at a summit in Chile.

A better-than-expected earnings performance for Asian firms also boosted the regional shares last month. Asian companies topped the average earnings estimates by about 5.5% in the third quarter, as per Refinitiv.

Due to the rise in the P/Es, regional shares are catching up with the valuations of their global peers, Refinitiv data showed.

(Graphic:MSCI Asia and World forward PE )

India and Malaysia were the most expensive in the region, with ratios of 17.22 and 15.95, respectively.

Meanwhile, China, Hong Kong and South Korea were the lowest-cost shares in the region, with P/E multiples of about 9.55, 11.17 and 11.3, respectively.

In October, Japan .N225, Taiwan .TWII and Singapore .STI shares rose 5.4%, 4.9% and 3.5%, respectively.

Losses in the region were led by Thailand .SETI and New Zealand .NZ50, which dropped 2.2% and 1.3% respectively.

(Graphic: Asia Pacific monthly price change - Oct 2019 )

(Graphic: Asia Pacific equities performance in 2019 )

Reporting by Gaurav Dogra and Patturaja Murugbaoopathy in Bengaluru, Editing by Sherry Jacob-Phillips