Asia Ex-Japan Markets To Face 25% More Downside - Daiwa

0855 GMT [Dow Jones] Asia Ex-Japan markets could face another 25% downside from current levels if investors start pricing in global-recession scenario to companies” earnings projections, Daiwa says. Notes based on past cycles, if current economic malaise is just as damaging for Asia, EPS would fall 20%-30% vs AXJ markets” current implied 12-month forward EPS growth at 5%. Says “overly optimistic” earnings-growth forecasts are key risk, as valuations at rather undemanding 12-month forward PER of 9.8X vs low of 9X during 1988-89 recession and below PERs during Asian financial crisis, SARS period. “Given the year-to-date correction in Asian markets, we think there are many stocks that are attractively priced, especially if investors were to begin looking at oversold cyclicals.” Says China Mobile (0941.HK), Belle International (1880.HK), Esprit (0330.HK), Samsung Heavy Industries (010140.SE), SembCorp Marine (S51.SG) fit bill. (LES)