I'm quite interested in buying Asia. Have been eyeing and playing
Japan for a while. I think it is undervalued. Taking Hitachi as
an example (the company contributing roughly 2% to Japan's GDP).
Roughly it costs 10x less than GE, based on long-term price/sales,
price/book ratios. P/e is a more short-term issue; yeah, p/e of
38 is a bit high, but with a margin of roughly 1% that's OK. So,
this is a margins play. If conditions were to change,
margin increase from 1 to 6% would produce enormous earnings growth.
There are many more such companies in Japan. However, with the
regional slide, I'm in doubt now (new bad loans?).
Everybody here seems to be buying SEA countries - Malaysia, Korea,
Thailand, Hong Kong, etc. -stock markets which recently dropped.
Why are we buying? Is it because Templeton or others said so?
Is this recent huge run-up the end of the bear or a dead cat bounce?
I don't know where to find valuation measures for these countries,
and I'm quite interested in those. This occasional Malaysian
figure (stock val/GDP of 135% at the minimum), at least, seems
alarming (congratulations to everybody who bought EWM before
the recent run-up - this is end of 1997 figure).
After all, we are in the market as buyers for countries
which are likely to fall in recession or
depression. This could mean that
companies could be losing money, and be valued according to their
book value... I can't so far find links to overall valuation of these
markets, so if people here know much more about these issues than
I do (and I don't), I would appreciate very much if someone posts.
-Vi
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