SINGAPORE (Reuters) – Southeast Asian stock markets have surged to record or multi-year highs in recent days, but investors and strategists expect further gains thanks to lower oil prices, strong regional economies, and healthy cash flows.
Rallies in Singapore, Indonesia, Philippines, and Malaysia have been driven largely by interest rate-sensitive bank and property stocks such as DBS Group (DBSM.SI: Quote, Profile, Research) and CapitaLand (CATL.SI: Quote, Profile, Research) — the region’s largest — as investors think that interest rates have peaked and may start to decline.
By some measures, markets now look expensive.
At current levels, Asian markets have a price-to-book value ratio of 2.1 times. That’s well above their 10-year mean of 1.7 times, but still cheaper than the U.S. market, which trades at a price/book of 2.6, and Europe, which trades at 2.3, according to Citigroup regional strategist Markus Rosgen.
