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雷达卡
Asia ex Strategy
Plenty of Bubbles in a Glass of Champagne but None in Asia
Plenty of talk about a bubble but little-to-no evidence — Perception vs reality in this case are two very separate things. Looking at eight factors, from valuations, balance sheets, flows via trading activity to prior bubbles, leads one to the conclusion that to talk of a bubble at this stage is premature. Could we have a bubble? But yes, of course. Asia ex has had four bubbles in the last 35 years: why not a fifth?. Leave real rates low for long enough and we’ll be guaranteed one.
Indonesia and the broad consumer are closest to prior peak valuations — Indonesia on a P/BV has 22% upside to the prior peak of 6x; the broad consumer has 13% left to reach 3.4x book. Set against that, HK could rise by 83% to hit the all time high P/BV, China by 104% and even India would need to rise by 138%. Sector-wise, materials have 40% upside to peak, banks and industrials have 50% upside, energy 96%, real estate 100% with TMT in excess of 300%.
We remain bullish, with an MXASJ target of 695 or 22% upside for 2011 — We like banks, energy, industrials, real estate and tech, and HK, Korea and Taiwan. Near-term risks are a US$ reversal as it becomes too consensus to be negative on the US$ and risk assets, i.e. Asia ex GEMS, selling off temporarily and then rising further.
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