Emerging Asia Earnings
Philippines, Taiwan Are Bright Spots
June 30, 2014
Asia Pacific ex-Japan trades at 12 times 1-year forward earnings, approximately in line with its long-term average, on the back of consensus earnings growth of 11.8% for 2014 and 10.1% for 2015, data provided by Nomura Securities show.
On the earnings front, the Philippines and Taiwan are the bright spots. In the last four weeks, analysts revised up their 2014 and 2015 earnings growth by 1.2 and 0.7 percentage points respectively to 7.5% and 14.1%. MSCI Philippines now trades at 18.4 times 1-year forward earnings, 26.5% above the long-term average of 14.6 times.
Taiwan also reported upward earnings revisions, especially for this year. In the last four weeks, analysts revised up their growth forecast by 1.3 percentage points to 14.2%. Taiwan currently trades at 14.2 times 1-year forward earnings, in line with its long-term average.
In anticipation for the new iPhone 6, analysts raised their estimates for technology companies that work with Apple. For instance, in June, of the 32 analysts that follow Taiwan Semiconductor Manufacturing Co. (TSM), or TSMC, 27 raised their estimates, according toFactset. TSMC constitutes about 14% of MSCI Taiwan. MediaTek (2454.TW/MDTKF) is another example. In June, 26 out of 30 analysts raised their estimates.
This month, the iShares MSCI Taiwan ETF (EWT) has advanced 8.5%. The iShares MSCI Philippines ETF (EPHE) rallied 18.2%.