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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (95294)	3/28/2002 11:02:22 AM
From: ild	Read Replies (1) \| Respond to of 132070

Low market valuation in Asia relative to that in the US is also a powerful argument in favor of a bull market in the region (see "US Premium Likely to Decline," February 20, 2002). MSCI Far East ex-Japan now trades at 1.6 times book value and 19 times earnings versus 3.2 times book value and 33 times earnings for the US market. The higher US valuation has been justified by (1) high returns on capital, (2) better corporate governance, and (3) lower systemic risk in the US. However, as Asia improves relative to the US in these indicators, the US premium should decline. The critical question, however, is whether the US is overvalued or Asia undervalued. I believe that the US market is overvalued and that Asia's is moderately overvalued. morganstanley.com