Goldman Sachs Asian Weekly Kickstarts - Oct,2013

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Goldman Sachs China Weekly Kickstarts.pdf
Goldman Sachs Asian Weekly Kickstarts.pdf
Goldman Sachs Japan Weekly Kickstarts.pdf
Goldman Sachs India Weekly Kickstarts.pdf



Asia-Pacific Weekly Kickstart
US came to agreement on fiscal debate; Korea continued its outperformance in Asia

- MXAPJ +2% with Korea continuing its outperformance; China and Indonesia lagged
- Regional 12-month forward P/E multiple now at 12.2X; P/B at 1.7X
- The peak of 3Q results will be in the coming 2 weeks

Performance
• MXAPJ +2% with Korea continuing its outperformance; China and Indonesia lagged
• Domestic and commodities sectors outperformed; TW Apple Supplier down 3%
• Software and services have outperformed for the 6th consecutive month; South Asia has outperformed month-to-date after 3 months of sharp sell-off
• AUD +1.9% and IDR +4.2% vs. USD

Earnings and valuations
• MXAPJ 2014 EPS in USD term has picked up
• Korea and Thailand earnings were still revised down
• MXAPJ P/E has risen to 12.2X, P/B is at 1.7X
• Malaysia’s P/E is close to 5-year high

Liquidity and fund flows
• US$2bn inflow into EM Asia, most into Korea
• Cash turnover increased most in China

Risk, volatility and correlation
• Implied vol remained elevated
• The region is turning more “micro” trading

The charts we are watching
• Foreign buying still favors N. vs. S. Asia
• We recommend AeJ Global cyclicals vs. asset sensitive financials to invest in improving US growth and higher rates
• Large sectors weighing down aggregate P/E
• The peak of 3Q results will be in coming 2 weeks