Asia Equity Strategy -: Sell the Expensive 10 ::Credit Suisse,

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We introduced the Expensive 10 on 13 April 2011. Since then, a
basket of equally weighted ten most overvalued stocks (among
the top 100 by market capitalisation) has fallen by 19.1% versus a
17% fall in MXASJ (MSCI Asia ex-Japan).
● On our price-to-book versus ROE valuation model, the ten most
overvalued stocks (in order) are Baidu, Hong Kong Exchanges &
Clearing, Tingyi (new entrant to Expensive 10 basket), Tencent
Holdings, ITC (Indian Tobacco Company), Belle International (like
Tingyi a new entrant to the Expensive 10 basket), Coal India (Coal
India and ITC are the only two stocks in the Expensive 10 that
have not fallen), Sands China (see Figure 1) and HDFC (Housing
Development Finance Corporation).
● Of the Expensive 10, we highlight that Sands China (149%
premium, its highest ever), Tingyi (373% premium, its highest
ever), ITC (322% premium, its highest ever), Belle International
(209% premium, back to previous high), Coal India (169%
premium, its highest ever) are trading at the top of their historical
valuation range.


Since introducing Expensive 10 on 13 April 2011 Expensive
10 has fallen by 19.1%
We introduced the Expensive 10 on 13 April 2011. Since then, a
basket of equally weighted ten most overvalued stocks (among the
Top 100 by market capitalisation) has fallen by 19.1% versus a 17%
fall in MXASJ (MSCI Asia ex-Japan).
Expensive 10
On our price-to-book versus ROE valuation model, the ten most
overvalued stocks (in order) are Baidu, Hong Kong Exchanges &
Clearing, Tingyi (new entrant to Expensive 10 basket), Tencent
Holdings, ITC (Indian Tobacco Company), Belle International (like
Tingyi a new entrant to the Expensive 10 basket), Coal India (Coal
India and ITC are the only two stocks in the Expensive 10 that have
not fallen), Sands China (see Figure 1) and HDFC (Housing
Development Finance Corporation.
Infosys and BCA (Bank Central Asia) have dropped out of the list.
Infosys has fallen by 26% since we published our last basket on 12
July. BCA (Bank Central Asia) has dropped out as its premium is now
smaller than the premium for Belle and Tingyi.


Expensive 10 trading towards the top end of their historical
valuation range
Of the Expensive 10, we highlight that Sands China (149% premium,
its highest ever), Tingyi (373% premium, its highest ever), ITC (322%
premium, its highest ever), Belle International (209% premium, back
to previous high), Coal India (169% premium, its highest ever) are
trading at the top of their historical valuation range