Deutsche Bank-2024 APAC Outlook Too bad, for too long, in too many places-105842315

DeutscheBankStrategyDateResearch11January20242024APACOutlookAsiaStrategyUpdateJapanToobad,fortoolong,intoomanyPeterMilliken,CFAplacesResearchAnalyst+852-22036190WeseeAPACequitiesbenefittingfrom:1)Liquiditytrendsmovingintheregion's,andinequities',favour,and2)Fallinginflationandinterestratesprovidingalifttoearnings,whileGDPgrowthratesremainsteady.WhiletheindexP/Eisaboveaverage,thisreflectsafairlypoorrunofprofitability.TheMSCIAxJhasaBloombergconsensusEPSliftof7.5%anticipated,soourestimateofa15%riseintheindexrequiresminimalrerating.Equities,however,acrossmostmarketsareonestandarddeviationlowinmostand2s.d.lowinparts,sothere'sapathtomultipleupside.Wenoteinsidehowmanymarketshavehadasmanyormoredownyearsthanupinthelasttwodecades,andHKhashadfourdownyearsinarow,soistestingtheboundsofmarkethistoryacrossAPAC.HK/CHandSEAsianmarkets,afteratoughdecade,appeartohaveasimilarsetuptothemid-2000s,andweexpectthemtorallyaround20%eachthisyear.WethinkitmightbetoughergoinginINandTW,whichweexpecttoconsolidateattheselevels,whileweexpectJPandKRtoadvance5%-10%.Webelievethebestwaytopositionforthisistopivotawayfromleaders,towardslaggardsectorsandmarkets.Wethinkthemajorriskforinvestorsisgrowthnotcomingthroughasexpectedshouldtheglobaleconomyslow.Thisisparticularlyriskyfortech-relatedstocksinhotareaswherecapacityisbeingaddedrapidlyandvaluations...