BlackRock's Swan: Earnings stability is a positive sign for Asian equities

Five years of downgrades

After five years of steep earnings downgrades in Asian equities, we are now seeing encouraging signs this trend is abating, writes BlackRock's Andrew Swan.

While this might partially be a reset of prior expectations that were unrealistically high (be it in the form of reform potential in India, or the take-off of Chinese internet companies), it has also been a welcome indication that companies are starting to be more disciplined around capital expenditure and returns on equity. Coupled with early signs of a pick-up in demand, it makes us more optimistic that we will reach a more balanced supply/demand environment, which should translate to an improved Asian corporates' pricing power in the long run. Why China's slowing growth poses risk ...