Valuations have also become more attractive in the region, with the equal-weighted price-to-earnings ratio falling to 15.6 times, slightly above the long-term average, down from its recent 17 times, Goldman said. Separately, Credit Suisse said Asia-Pacific shares are trading at 12.2 times 12-month forward earnings, compared with a five-year average of 12.5 times.
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Foreign investors pulled $14.6 billion out of Asia-Pacific mutual funds and exchange-traded funds (ETF) over the past four weeks, while other investors yanked another $2.39 billion, according to data from Jefferies.
While the earnings outlook is for modest growth in the region, it should also help to support equities, Goldman said.
"The current reporting season is good enough to support a recovery rally into year-end," Goldman said, noting that with about 25 percent of the regional index companies reporting third-quarter figures, the nine-month earnings are tracking about 76 percent of full-year consensus forecasts, in line with the historical average.
Goldman also sees some policy support for the region, expecting China's economic growth to stabilize after August data disappointed, with modest policy loosening including more accommodative mortgage financing and lower interbank rates.
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In addition, lower oil prices are helping countries such as India, Indonesia and Thailand cut their fuel subsidy bills with less of a social, political and inflation burden than had been expected, it noted.
Goldman tips overweight calls on China, India and Taiwan, with underweights on Australia, Hong Kong and Malaysia. It also prefers U.S.-exposed shares over Europe-exposed ones to play the theme of improving U.S. economic growth and a stronger U.S. dollar.