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Valuation of Asian shares rises to decade high on stimulus support

MSCI’s broadest index of Asia-Pacific shares rose 4.29% last month, recording its fourth straight monthly gain. The index’s 12-month forward price-to-earnings (P/E) ratio was at 16.15, the highest since December 2009, the data showed.

Meanwhile, MSCI’s gauge of stocks across the globe climbed 5.14% in July, lifting its P/E ratio to 19.65, the highest since at least June 2003.

Lower interest rates, stimulus support from regional governments and retail investors’ increased participation in stock markets have bolstered the valuation of regional indexes this year, analysts said.

Hopes that vaccines against the COVID-19 disease might be ready by the end of the year also supported the risk-on trade in regional markets.

China’s benchmark stock index surged 10.9% in July, recording its best monthly rise since February 2019, and topped regional gains.

New Zealand and Malaysia shares were the most expensive in the region, with P/E ratios of 32.93 and 18.11, respectively.

Taiwan equities hit a record high of 13,031.7 in July and gained about 9% last month, the biggest monthly rise after China.

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