Equities in south east Asia are over-valued despite the ongoing emerging market rout and investors should get out while they still can, a senior portfolio manager from Macquarie told CNBC on Monday.
"What you're faced with in South East Asia is a very illiquid market, so we've been saying 'Don't hold onto these stocks for too long' because you don't want to be the last to get out of these markets," Sam Le Cornu from Macquarie told CNBC on Monday as emerging markets continue to suffer from record outflows on fears that the U.S. Federal Reserve could start tapering its bond buying program imminently.
Emerging markets and currencies that once benefitted from central bank quantitative easing (QE) programs as investors sought higher yielding assets are now suffering heavy losses. Southeast Asian indexes have been hard hit, particularly Indonesia's Jakarta Composite, which has fallen 18 percent over the last three months.
Le Cornu, who is a senior portfolio manager of Asia-listed equities, said that stocks in the Philippines, Thailand, Indonesia and Malaysia were overvalued as they were either trading "way above their ten-year (price-to-earnings) averages" or close to them.
The current P/E ratio on the Jakarta stock exchange is 12.55, while for the Bursa Malaysia the ratio is at 15.65. Meanwhile, the Philippine stock exchange trades at 18.17 times current earnings and Thailand's SET index trades at 13.17. Though the P/E ratios have decreased in recent months, they are not much lower than the pre-sell-off levels.
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"We're not seeing any bargains," Le Cornu said. "If you then overlay the macro-backdrop, the macro situation for Asean is not strong," Le Cornu said, alluding to current account deficits facing Indonesia and Thailand. Macquarie's Asia New Stars fund sold south east Asian stocks and "took significant profits in May," he added.
Before pulling out of southeast Asian (Asean) stocks altogether, however, economist Roger Nightingale suggested that there was still money to be made in the region.
"When you see the sell-off in south east Asia at the moment, you say to yourself as the good analyst or manager that some of these stocks aren't justified as falling as much as the others -- and that's where the good analyst can make his money by picking out those ones," Nightingale told CNBC Europe's "Squawk Box."
Anantha Nageswaran, chief executive of Vansight, said that despite some opportunities in Asean stocks, they remained vulnerable to market volatility.
"If the U.S. markets get into some sort of funk, I'm sure the Asean and emerging markets won't remain unscathed - there are quite a few things stacked up against them from a macro perspective and from the global perspective. I would say the reward/risk ratio of individual stocks in some sectors is not very favorable at the moment."
- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt