Nov 07. In short - yes and no. Let me expand on initial answer. I was lucky enough to see the potential of the Asian markets a few years ago and therefore had a pretty decent return on my investments.
So do I believe with the current valuations that Asia still provide value? My answer really depends on your time horizon. In the short term I would be very careful about putting any new money into Asia - especially China. There are strong fundamental reasons to invest but one must bear two very important points in mind.
Firstly China and most of Asia are still emerging markets - there are many economic storms that they have yet to weather...so I urge caution until we have seen China weather those storms.
Secondly and most importantly Rome was not built in a day...and neither will China be. Yes the growth rates have been spectacular and the rising population that is in the midst of a rapid conversion to capitalism are good omens...but I would like to point out that things take time. With all this blistering growth...somethings are being missed and these issues are sure to come home to roost pretty soon. I seriously doubt that China will be able to maintain its growth without a derailment in the near future.
But despite the problems it may face in the short term - I believe the long run fundamentals look good.
So to answer my initial question: Are the Chinese markets overvalued? My impressions would be yes in the short term and no for the long term. I would be careful with any new investments in the short term...but I will keep my eye on how Asia handles the forth coming storms to assess its real long term value.
