(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.
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.
(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
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