Chart Book | Chart of the day: Equity sentiment gap narrows

Sentiment towards Asia ex-Japan equity markets has whipsawed from extreme pessimism to extreme optimism this year, but is now looking more balanced. The region is certainly less stretched relative to US equities. Emerging markets as a whole trade at a 25 per cent discount to developed markets in terms of their respective trailing price-earnings ratio. Meanwhile, Asian growth remains the strongest of any region. Expect the sentiment gap between Asia ex-Japan and the US to start to close.

David McBain is a strategist with Absolute Strategy Research