Markets round-up: India among most overvalued Asian markets

Credit Suisse examines the view that India has a very low PEG ratio, or price-to-earnings as a ratio of earnings growth; therefore, making its valuations attractive


Photo: Bloomberg
Photo: Bloomberg

Foreign brokerage firm Credit Suisse remains underweight on India.

It finds India one of the four most expensive markets in the world, with the others being Indonesia, the Philippines and Malaysia.

Credit Suisse examines the view that India has a very low PEG ratio (price-to-earnings as a ratio of earnings growth), therefore making its valuations attractive.

The brokerage firm is unconvinced by this view, stating that earnings tend to be overestimated, and if it used the historical difference of actual versus estimates, then India’s PEG of 0.89 times would rise to 1.94 times.

Sugar output revised upwards

Rising sugar prices is one of the factors driving food inflation, worrying the government about its fallout as the festival season will see buying increase.

State elections in early 2017 are another concern, as higher sugar prices make for bad press. However, some good news is coming its way.

Sugar industry association Indian Sugar Mills Association (ISMA) has put out its revised sugar output estimate, based on a newer set of satellite images. It has raised its sugar output estimate by 100,000 tonnes to 23.37 million tonnes, compared to its earlier estimate made in July. While that’s not a huge increase, it does provide comfort that output will not be lesser than earlier expected.

However, these numbers are still subject to variation, depending on actual cane output, the sugar yield and timely crushing. ISMA says there will be enough carry over stocks for the next season, and that imports are not needed.

Nickel prices rise on fears of lower Philippine output

The price of nickel, used to make stainless steel, took wing after the Philippines cracked down on miners not adhering to norms. The country was conducting an environmental audit of its mines, fulfilling an election promise made by newly elected President Rodrigo Duterte.

A Bloomberg report said that output could be lower by 30% due to mining suspensions apart from reasons such as weak prices and bad weather. The Philippines accounts for 20% of nickel ore mining supply, according to Bloomberg. Spot prices of nickel are up by 3.4% over a week ago and up by 8.1% in the month so far on the London Metal Exchange.

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