By Chris Tracey, investment director Given the trials and tribulations that have afflicted ...
By Chris Tracey, investment director
Given the trials and tribulations that have afflicted the world economy over the past twelve months it is hard to believe the best performing region over that period was Pacific ex Japan.
A remarkable feature of the region was the resilience of profits in 2001, those of the MSCI index ex Japan falling by an estimated 5% (according to Morgan Stanley) a testament to the degree of corporate restructuring that followed the 1997/8 crisis and of course the regional P/E at the start of the year was at its biggest discount to that of the US for over a decade.
Virtually all the more recent economic statistics suggest that the worst is over. Given the sharp rise in markets over the fourth quarter we are a little reluctant to chase them but, even if there are significant question marks against the strength of a US recovery, the region's multiple of an estimated 15 times this year's earnings is still a substantial discount to the valuation of Western stock markets and to many of their cyclical shares.
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