Earnings estimates for Asian firms upgraded for 7th straight month 

Taiwanese and Indian firms saw the most significant revisions of about 4.5% each, while Thai and Malaysian firms saw their predictions revised up by more than 2% 

by Gaurav Dogra
Earnings estimates for Asian firms upgraded for 7th straight month 
Analysts say Taiwan's short recession has been followed by a rebound in the wake of China's recovery.

Analysts raised their forward 12-month profit estimates for Asian companies for a seventh straight month in January, predicting increased government spending and a faster roll-out of coronavirus vaccines will power corporate earnings. 

The forward 12-month earnings estimates of MSCI Asian Pacific index firms were raised by 1% in the past month, according to Refinitiv data.

Taiwanese and Indian firms saw the biggest upgrades of about 4.5% each last month, while Thailand and Malaysian firms also received upward revisions of over 2%. 

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"Taiwan's shallow recession has been followed by a robust rebound on the hot heels of China's recovery. From an equity market perspective, the recovery is broad-based with many unpopular sectors experiencing a rejuvenation," brokerage Jefferies said in a report last week.

Marking a sixth straight month of expansion in factory activity, India's Manufacturing Purchasing Managers' Index hit a three-month high of 57.7 in January.

Meanwhile, analysts upgraded China's earnings estimates by about 1.5%, the data showed.

GOOD SHAPE

China's economy grew 6.5% year-on-year in the fourth quarter, topping expectations and ending a rough, coronavirus-stricken 2020 in remarkably good shape.

On the other hand, South Korea and Japanese companies had the lowest earnings upgrades in the region.

"Consensus is expecting 2021 EPS for AxJ (Asia ex-Japan) 14% above the previous 2017 peak, for Korea the street is still forecasting 2021 EPS below 2017-18 levels," Credit Suisse said in a report at the end of last month.

By sector, cyclicals such as materials and energy witnessed the biggest earnings upgrades last month, underscoring increased hopes of economic recovery this year. 

  • Reuters

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