May 10 (Reuters) - Analysts in April hiked 12-month earnings
estimates for Asian companies by the largest amount in five
months, data showed, as manufacturing activity and demand for
the region's exports rose.
Analysts lifted forward 12-month earnings by 3.2% in April,
the highest since December, according to Refinitiv data.
The big upgrades came as regional economies such as South
Korea, Taiwan and Vietnam saw an increase in factory output and
shipments thanks to a rise in demand from developed economies
which are making a fast recovery from the coronavirus crisis.
Manishi Raychaudhuri, head of Asia-Pacific equity research
at BNP Paribas, said remote working and accelerating adoption of
ecommerce enhanced demand for semiconductors and tech hardware,
boosting the profitability of the region's manufacturers.
"Stronger consumption and investment demand in the developed
economies have boosted commodity prices and the revenues of the
North Asian exporters," Raychaudhuri said.
Taiwan and South Korea saw earnings upgrades of 8.6% and
6.9% respectively in the past month, while Australia and China
saw upgrades of 4.3% and 1.4%.
But Asian nations that have seen a recent surge in
coronavirus cases such as India, Indonesia and Philippine saw
their earnings downgraded during April.
MSCI's Asia-Pacific index gained 1.4% in
April, but the forward 12-month price to earnings ratio dropped
to a six-month low of 16.51 at the end of April, reflecting the
rise in earnings estimates.
The index gained more than 0.5% on Monday on hopes that
interest rates will remain low due to receding inflationary
pressures in the United States.
"The tug of war of the two forces growth and liquidity
is likely to be present for the rest of 2021 and beyond," said
Alicia Garcia Herrero, Asia-Pacific chief economist at Natixis.
"The key will eventually be whether growth can be
sustainable enough to take the driver seat over liquidity
withdrawal," she said.
(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in
Bengaluru; Editing by Edmund Blair)