Comparison of relative valuation ratios in the ASEAN-4 banking industry

• Main Authors: Hibo, Dominique Marie F., Liu, Yi, Mendoza, Monica Aliza D.
• Format: text
• Language: English
• Published: Animo Repository 2017
• Subjects: Stocks > Rate of return; Price-earnings ratio > Southeast Asia; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/9054
• Institution: De La Salle University

Stock trading is one of the most common forms of investment. Traders have come up with different ways in which they can maximize their investments and gain high returns. Fundamental analysis is a primary example of this, as it uses ratios derived from a listed firm financial data and performance to assess its future stock return. The idea is that low valuation ratios result in an increase on future stock returns. In this study, the researchers aimed to investigate whether the price to sales, price to earnings, and price to book ratios do in fact aid in analyzing stock returns. The group also procured four ASEAN countries to test whether such ratios are significant in similar economies. Results showed only one out of the four countries deemed all ratios significant. Furthermore, the expected negative relationship between the ratios and stock returns were not met by all countries. The researchers believe these results are caused by different external and internal factors which impact the industry and in turn, the firms factors of which were not considered in the regressions.