This is not true for all of Asia but certain pockets in Asia are surely looking a tad overpriced. As a result of these handful of markets, Asia’s equity valuations in terms of PE ratio have touched a 10-1/2 year high. The MSCI Asia Pacific Index currently quotes at a P/E ratio of 15.62 as compared to 14.34 last month. This peak was last seen in December 2009.

Select indices have rallied sharply in the last on month. For example, benchmark indices in markets like India, Hong Kong, Taiwan and Philippines surged over 6% in the last one month. This was driven by a surge in liquidity as well as hopes of an economic recovery in the US and China. The two largest economies have been showing signs of a V-shaped recovery.

This has a lot to do with some expensive Asian markets. The most expensive markets were New Zealand with P/E ratio of 30.7, India with P/E of 19.3 and Malaysia with P/E of 17.4. For the Indian and Chinese markets, the latest upward thrust to market sentiments has come from both their armies deciding to withdraw from the LAC and potential for peace.