Why are asian stocks so cheap?

[Herodot]

Hi, forgive me my lack of knowledge, but i am from europe (germany) and i am amazed how Mr. Market seems to be different here in asia.
I look at stocks from singapore and china, and i find many many that are below PE of 10 and many that are below PE of 5.
In europe & USA however, a PE of 15 is pretty normal with things below 10 being cheap, and a company with PE 5 is usually in serious trouble and heading for bankruptcy. In northern europe even a PE 20 is still pretty normal.
So i am amazed about the amount of 'cheap' stocks and different valuation that seems be used in asia.
Maybe this difference is because there is higher inflation in asia?
Maybe it is because the asian people dont have so much money and cant invest in stocks?
Maybe the money of the asian people goes into a different asset (real estate bubble?)
Just my 0.5$ observations

[d.o.g.]

I look at stocks from singapore and china, and i find many many that are below PE of 10 and many that are below PE of 5.

Corporate governance is usually better in the US and Europe than in Asia. If investors have more confidence that the numbers are real, they are usually willing to pay higher prices.

I have come across a few Europeans who lost their pants buying heavily into the S-Chips (Chinese companies listed on SGX). They thought they had found the bargain of the century, buying companies with 20% ROEs at PEs of 3-5x, P/B less than 1 etc. They subsequently found out at great personal expense that many of the S-Chips had cooked their books.

Some of these companies, like China Printing & Dyeing and Beauty China, have since been liquidated (total loss). Others have been suspended indefinitely with no clear hope of seeing daylight (Fibretech, China Milk, Celestial Nutrifoods).

So i am amazed about the amount of 'cheap' stocks and different valuation that seems be used in asia.

If you do your homework you will not be so amazed. In Asia a lot of the useful information is not in the annual report. You have to dig into the personal histories of the people behind the companies. Usually, the stocks run by "good guys" trade at premiums, while those run by "crooks" trade at discounts.