On the left, the scatter plot shows the next 12 months' price return of APAC ex-Japan equities (y-axis) at various price-to-book (P/B) ratios (x-axis). Each dot represents monthly data points since 1996. As you can see from the scatter plot, low P/B ratios have usually resulted in positive returns in the subsequent 12 months. The higher the P/B ratios become, the less likely this appears to occur. The APAC ex-Japan index has still historically tended to provide positive returns at current PB ratios.

On the right, the green line shows the MSCI APAC ex-Japan Index's relative performance against MSCI World Index, which is a benchmark for developed market (DM) equities. The grey line shown is the inverted U.S. dollar index, which means when the U.S. dollar is stronger, the line goes down. The chart shows that APAC ex-Japan equities tend to outperform DM equities when the U.S. dollar weakens. Our longer-term outlook is for U.S. dollar weakening to continue with the U.S. government now running very large fiscal deficits.