Singapore delivered yet another better than expected set of economic performance. The city state’s gross domestic product (GDP) grew 5.7% year-on-year (YoY) in its third quarter of 2017 (3Q17) — the highest since 4Q13 — not only surpassing the advance estimate of 4.6%, but also trouncing the consensus estimate of 5%.

While the encouraging set of results has been widely reported in local news outlets, Singapore’s strengthening economy is not a standalone case in the global context.

Malaysia’s economy has staged a roaring recovery as its GDP surged 6.2% YoY in 3Q — the fastest in more than three years — and surpassed market expectations for a 5.7% growth rate.

Growth in 3Q was driven largely by improvements in exports and private consumption, whose growth rates accelerated to 11.8% and 7.2% respectively, and are likely to remain strong enough to prop up future economic expansion.

Despite being one of the fastest-growing economies in South-East Asia, Malaysia’s equity market performance year-to-date has lagged behind most of its peers.

We believe there is still upside potential for Malaysian equities, given that the FTSE Bursa Malaysia KLCI is currently trading at a price-earnings (PE) ratio of 15.1 times (based on 2018 estimated earnings), which is below its 16 times fair PE ratio.

Furthermore, the recently announced budget, which included reductions in personal income tax and cash handouts, is likely to have a positive impact on the economy and stock market, especially consumption-related and financial companies.

China has been making the news mostly for the wrong reasons: A deepening bond rout, a heavy sell-off in the stock market and mounting fears over a slowing domestic economy that will inevitably affect the rest of the world.

What has been less talked about is the fact that beneath the slew of negative news are signs that China’s economy remains robust.

China’s 3Q GDP of 6.8% YoY, albeit a slight slowdown from the previous quarter, was in line with market expectations and the economy remains one of the fastest-growing in the world.

While the current debt crackdown and economic reforms may cause short-term pain, we believe the shift towards a more sustainable growth model is positive for the economy in the long term.

China remains our top-rated single country equity market. With the HSML100 Index trading at a PE ratio of 10.4 times (based on 2018 estimated earnings), that represents a significant discount to our fair PE ratio of 13 times, we believe its valuations are undemanding and represent a compelling investment opportunity.

A market worth a look is South Korea, whose economic growth accelerated to 3.6% YoY in 3Q, the fastest rate since 1Q14.

The semiconductor producing economy has benefitted from the surge in global demand for semiconductors.

The industry has been clocking record breaking sales month after month, with the latest three-month average of US$36 billion (RM146.88 billion) semiconductor sales in September.

South Korea’s exports have recorded 12 consecutive months of growth, with future semi-conductor shipments under-pinned by healthy demand in major-end markets such as smartphone, automotive and the Internet of Things.

Improvements in consumer sentiment and the easing of geopolitical tensions are also expected to lend strength to future economic expansion.

We believe the Kospi Index remains undervalued, with its current PE ratio of 9.5 times (based on 2018 estimated earnings) below its fair PE ratio of 11.5 times, and is a market worth investing in.