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Asian Markets Offer Good Market Returns to Start 4th Quarter

·3 mins read

- By James Li

On Thursday, a day where several Asian countries celebrate the Mid-Autumn harvest festival, GuruFocus' Global Market Valuation pages show that countries like Singapore offer good returns based on current market valuations.

Mid-Autumn Festival background

According to ChinaHighlights.com, the Mid-Autumn Festival stemmed from the Ancient Chinese custom of worshipping the moon in autumn "to thank it for the harvest." The holiday takes place on the 15th day of the eighth month of the Chinese lunar calendar. In terms of the Gregorian calendar, the Mid-Autumn Festival date could range between September and early October. Common Mid-Autumn traditions include eating mooncakes and lighting lanterns.

Other Asian countries like Singapore, Hong Kong, Korea and Japan also engage in Mid-Autumn traditions.

Buffett's market indicator applies to global markets as well

Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) CEO Warren Buffett (Trades, Portfolio) said that the percentage of total market cap to gross domestic product is "probably the best single measure of where valuations stand at any given moment." For the U.S. market, the Buffett Indicator captures the ratio of the Wilshire 5000 full-cap index to the U.S. GDP.

GuruFocus also applies Buffett's market valuation concept to global markets, including Asian countries like China. As of Thursday, the ratio of the SSE Composite Index to China's gross domestic product is 65.12%, modestly overvalued compared with a 10-year minimum, median and maximum of 38.54%, 59.32% and 93.1%. Based on current market valuation levels, the implied market return per year for the Chinese stock market is 6.1% per year, including contributions from dividends and economic growth.

Singapore among top Asian countries in terms of implied market returns

As the Global Market Valuation pages illustrate, Singapore's expected market return per year is 16.90%, second only to Turkey's expected market return of 17.8% per year. Singapore's current market valuation level of 78.25% is near a 20-year low, highly undervalued compared with the 20-year median of 145.8%.

Figure 1 summarizes the projected annual market return of 18 markets around the globe, including the U.S. and countries in Asia and Europe.

Asian Markets Offer Good Market Returns to Start 4th Quarter
Asian Markets Offer Good Market Returns to Start 4th Quarter

Figure 1

GuruFocus All-in-one Screener receives new "index membership" feature

As Figure 2 illustrates, GuruFocus users can now screen for stocks based on a specific index. For example, users can screen for stocks on the Standard & Poor's 500 Index, the Nasdaq 100 Index, the Dow Jones Industrial Average, the Russell 2000 and U.K.'s FTSE 100. We also have several indexes from Asian markets.

Asian Markets Offer Good Market Returns to Start 4th Quarter
Asian Markets Offer Good Market Returns to Start 4th Quarter

Figure 2

Disclosure: No positions.

Read more here:

  • Hennessy Japan Small Cap Fund's Top 3rd-Quarter Trades

  • Third Avenue Value Fund's Top 4 Trades of the 3rd Quarter

  • 3 UK-Based Stocks With Expanding Margins Over the Past 3 Years

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This article first appeared on GuruFocus.