瑞信-亞太地區(qū)投資策略-下半年展望：時(shí)代充滿挑戰(zhàn)也有一線希望

13June2022

EquityResearch

AsiaPacific

AsiaPacificStrategy

2Houtlook:Challengingtimes

withsomesilverlinings

Strategy|Strategy

Figure1:CreditSuisseTacticalIndicators—inbullishterritory

3.53.02.52.01.51.00.50.0-0.5-1.0

-1.5

60%50%40%30%20%10%0%-10%-20%-30%

Dec-08May-10Oct-11Mar-13Aug-14Jan-16Jun-17Nov-18Apr-20Sep-21

Indexofleadingmarketindicators(LHS)MSCIAxJindex6Mforwardreturns(RHS)

Source:Refinitiv,CreditSuisse

Toughtimes,butwithsomehopeofresilience.Slowerglobalgrowth,highcommoditypricingandratehikesshouldkeepglobalandregionalmarketsonedgein2H22,butwedonotexpectAsiatounderperformglobalpeersandcanenvisionoutperformanceundertherightcircumstances.Asiaislessexport-dependentthanduringtheGlobalFinancialCrisis(GFC),andmostdomesticeconomieshavebettergrowthmomentumthanDMs.LessstickycoststructuresthaninDMscouldinsulateearningsinadownturn.OurTacticalIndicatorsforAxJhavejumpedtobullishterritoryandareatamorethantwo-yearhigh.

Favourmarketsdrivenbydomesticdemandorservicesorwithpositiveleveragetorates.WeretainourtacticalOverweightinChinaonexpectationsthatgraduallyincreasingstimuluswouldenableitslargedomesticmarkettodecouplefromaglobalslowdown.WehavecutKoreafromMarketWeighttoUNDERWEIGHTtoreducesensitivitytoglobalgrowthandaddedtoourexistingOVERWEIGHTinASEAN,whichremainsourfavouriteregion.WeupgradePhilippinesfromMarketWeighttoOVERWEIGHT,andaddtoourOVERWEIGHTinThailand,Asia’sbiggestbeneficiaryofashiftfromgoodstoservicesexpenditures.

CuttingITtoUnderweightfromMarketWeightandshiftingtoInternet.WecutIToninventoryrisks,fallingdemandandelevatedEPSrisk.WeconsiderITtobethelargesectormostvulnerabletostagflation.WewerealreadymoderatelypositiveonInternetbutnowraiseourpositionfromMarketWeighttoOVERWEIGHTonthesector’sexposuretoChina’sbigdomesticeconomy.Banksremainourfavouritelargesectoronpositive

leveragetoratesandfallingcreditcosts.Communicationsex-Internetremainsourfavouritedefensivesector.Weadjustourtoppicksonbottom-upconsiderationsandtop-downweightingchanges.Wecuttheyear-endMSCIACAPACindextargetwesetlatelastyearfrom212to170,leavingtheregionfairlyflatfortherestoftheyear.

ResearchAnalysts

DanFineman

6626146218

dan.fineman@

KinNangChik

85221017482

kinnang.chik@

DISCLOSUREAPPENDIXATTHEBACKOFTHISREPORTCONTAINSIMPORTANTDISCLOSURES,ANALYSTCERTIFICATIONS,LEGALENTITYDISCLOSUREANDTHESTATUSOFNON-USANALYSTS.USDisclosure:CreditSuissedoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethattheFirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.

13June2022

AsiaPacificStrategy2

Focuscharts

Figure2:MSCIACAPACtrailingP/BrelativetoWorld

-15%

-20%

-25%

-30%

-35%

-40%

-45%

Dec-11Dec-12Dec-13Dec-14Dec-15Dec-16Dec-17Dec-18Dec-19Dec-20Dec-21

Source:Refinitiv

Figure4:ASEAN4foreignownership

25.0%

24.5%

24.0%

23.5%

23.0%

22.5%

22.0%

21.5%

21.0%

Dec-14Dec-15Dec-16Dec-17Dec-18Dec-19Dec-20Dec-21

Note:AggregatedbyCreditSuissecoverage.

Source:Companydata,KSEI,CreditSuisse

Figure6:Won-yencrossrateflashingsellsignalforKorea

1200

1150

1100

1050

1000

950

900

850

60%50%40%30%20%10%0%-10%-20%-30%

Apr-13Apr-14Apr-15Apr-16Apr-17Apr-18Apr-19Apr-20Apr-21Apr-22

KRWtoJPYx100(LHS)6MforwardMSCIKoreareturns(RHS)

Source:Refinitiv

Figure3:PPI-CPIinflationdifferentials—China’sfallingfasterthanrestofregion

pp

14

12

10

8

6

4

2

0

-2

Dec-20Feb-21Apr-21Jun-21Aug-21Oct-21Dec-21Feb-22Apr-22

ChinaSelectedAPACmarkets

IncludesIndia,Indonesia,Japan,TaiwanandThailand.Source:CEIC,CreditSuisse

Figure5:ChangeincurrentaccountbalanceasapercentageofGDP2021-23

PP

Thailand

China

Japan

Singapore

Malaysia

Indonesia

Korea

Taiwan

India

Philippines

Australia

HongKong

6

4

2

0

-2

-4

-6

-8

Source:CEIC,Refinitiv

Figure7:Deviationof2022capex-to-salesfromten-yearaverage

2%

1%

0%

-1%

-2%

-3%

-4%

-5%

-6%

-7%

InformationTechnology

Industrials

Energy

Materials

ConsumerStaples

HealthCare

ConsumerDiscretionary

CommunicationServices

Financials

RealEstate

Utilities

Source:Companydata,CreditSuisseestimates

13June2022

AsiaPacificStrategy3

2H22outlook:Challengingtimeswithsome

silverlinings

Notallgrim

WeremaincautiousonequitiesgloballyontheassumptionofaUSrecessionnextyear,highearningsriskandstill-richvaluations.Nonetheless,wedonotbelievethatAsiawouldunderperformgloballyandseeagoodchancetheregioncouldproveresilient.MacromomentuminEmergingMarket(EM)AsiashouldbestrongerthanforDevelopedMarkets(DMs)andotherEMs.WeexpectEMAsia’sEPSrevisionunderperformancetoreverse.ValuationsarelessstretchedthanintheUS.AlthoughAsiaremainshighlysensitivetoglobalgrowth,fallingexportdependencehasreduceditsvulnerabilitytoarecessioninDMs.OurTacticalIndicatorshavemovedtobullishterritoryandareconsistentwithhighsingle-digitreturnsoverthenextsixmonths.

Markets:Domesticdemandandservices

Wefavourmarketswithlargedomesticeconomies,short-termdriversfordomesticdemand,positiveleveragetoratesandhighservicescomponents.WeretainourtacticalOVERWEIGHTinChinaonexpectationsthatgraduallyincreasingstimuluswillenableitshugedomesticmarkettodecouplefromaglobalslowdown.WehavecutKoreafromMarketWeighttoUNDERWEIGHTtoreducesensitivitytoglobalgrowthandhaveaddedtoourexistingOVERWEIGHTinASEAN,whichremainsourfavouriteregion.WeupgradePhilippinesfromMarketWeighttoOVERWEIGHT,andweaddtoourOVERWEIGHTinThailand.WelikePhilippineslowexportexposureandlargeBPOservicessector,whiletourismmakesThailandAsia’sbiggestbeneficiaryofashiftfromgoodstoservicesexpenditures.

Stylesandsectors

Onstyles,weretainourbiasforValueoverGrowthdespitearecentcutinourglobalvalueweightingtobenchmark.AsianValueischeaperthanglobalValue,andinflationsurprisesshouldbesupportive.Bysector,wecutITfrombenchmarktoUNDERWEIGHToninventoryrisks,fallingdemandandelevatedEPSrisk.WeconsiderITtobethelargesectormostvulnerabletostagflation.WewerealreadymoderatelypositiveonInternetbutnowraiseourpositionfromMarketWeighttoOVERWEIGHT.Welikethesector’sexposuretoChina’sbigdomesticeconomy.Banksremainourfavouritelargesectoronpositiveleveragetoratesandfallingcreditcosts,andCommunicationsex-Internetremainsourfavoritedefensivesector.

Stockpicks

Toreflectsharepricemovements,changesinanalystpreferenceandourtop-downweightingmoves,weintroducesomerevisionstoourAxJFocusListoftoppicks.WeaddCATL(ourfavouriteEVstock)andAyalaCorporation(inlinewithourupgradeofPhilippines).InInternet,wereplaceNeteasewithBABAandKuaishouinlinewiththenewpeckingorderofourChinaInternetanalyst.WeremoveCNOOCfollowingitsoutperformanceanddeleteSamsungElectronicsinlinewithourdowngradeofIT.InIndia,wereplaceInfosyswithUltratech,adomesticallyexposedcontrarianpickthathasoverdiscountedrisks.WeremoveZijinMiningonthepotentialimpactofslowerglobalgrowth.

Cautiousonglobalequities,butAsiashouldbesomewhatresilient

Favourmarketswithlargedomesticeconomies,short-termdriversfordomesticdemand,positiveleveragetoratesandhighservicescomponents

SlightbiasforValueoverGrowth.ShiftingfromITtoInternet

Haveadjustedstockpicksinresponsetosharepricemovesandinlinewithtop-downweightings

13June2022

AsiaPacificStrategy4

Notallgrim

Wearenotoptimisticonglobalorregionalequitiesinabsoluteterms,butwearehopefulthatAsia

canprovemoreresilientthaninpastdownturnsandpossiblymoreresilientthanglobalpeers.

Cautiononglobalequities

CreditSuisseglobalstrategistAndrewGarthwaiteremainscautiousonequitiesforthe2Hon

highearningsrisk,still-richvaluationsandanassumptionthattheUSfallsintorecessionnext

year.AndrewbelievesthattheFedputhasbeenreplacedwithaFedcallthatwouldtighten

policysupportifmarketsrally.Heexpectstheyieldcurvetoturnflatin4Qandforarecession

tohittheUSmid-2023.

ThreekeyvariablesforAsia

WeexpectthatthreevariableswillstandoutindeterminingAsia’sabsoluteandrelative

performanceinthischallengingenvironment.

Globalgrowth

Globalgrowthmattersmostforabsoluteperformance.Historically,APACearningshave

contracted20-45%inpastUSrecessionsandregionalmarketshavefallen26-60%peak-to-

trough.Asamorecyclicalregion,APAChasgenerallysufferedmorethantheUSinrecessions,

withtheUSfallingamoderatelylesssevere20-50%historically(AsiaPacificStrategy:The

downsiderisktoearnings(evenwithoutarecession)).

Inputcostinflation

Inputcostinflationplaysabigroleinbothabsoluteandrelativeperformance(AsiaPacific

Strategy:Inputcostspressures—identifyingtheweaklinks).APACmarginssufferedmorethan

thoseintheUSlastyearduetoahigherdependenceoncommoditiesbutsteadiedabitinthe

1QasthePPI-CPIgapnarrowed(Figures8and9).Thisyear,acampaignbyBeijingtolower

pricesforindustrialfirmshashadsuccessinloweringPPIinflation,andelsewhereCPIinflation

hasbeencatchingupwithPPI,withalag.Goingforward,theinteractionbetweencommodity

pricingandCPIinflationmattersagreatdealforhowAsianmarginsperformbothinabsolute

termsandrelativetoDMs.

Figure8:CommoditypriceinflationhitAsianmarginsin2H21

PP

2.52.01.51.00.50.0-0.5-1.0-1.5-2.0

1Q212Q213Q214Q211Q22

USAPAC

Source:Refinitiv,CreditSuisse

Currencies

Figure9:ButPPI-CPIinflationdifferentialshaveimprovedthisyear

PP

12

10

8

6

4

2

0

-2

-4

-6

Jan-20Apr-20Jul-20Oct-20Jan-21Apr-21Jul-21Oct-21Jan-22Apr-22

APACUnitedStates

Note:APACincludesChina,India,Indonesia,Japan,TaiwanandThailand.

Source:CEIC,CreditSuisse

Currenciesarethethirdbigvariablefortheregion.AstrongdollarandweakyenarebadforAxJ,

butgoodforJapan(Figures10-13).

AsiaPacificStrategy5

Figure10:AxJperformancenegativelycorrelatedwithdollar

115

1300

1250

105

1200

95

1150

85

1100

1050

75

1000

65

950

55

900

Dec-05Aug-07Apr-09Dec-10Aug-12Apr-14Dec-15Aug-17Apr-19Dec-20

BBDXYIndex(LHS)MSCIACWorldrelativetoMSCIACAxJ(RHS)

Source:theBLOOMBERGPROFESSIONAL?service,Refinitiv

Figure12:StrongdollarboostsJapanrelativetoAxJ

105

100

95

90

85

80

75

130

125

120

115

110

105

100

95

90

85

Dec-11Jan-13Feb-14Mar-15Apr-16May-17Jun-18Jul-19Aug-20Sep-21

DXYIndex(LHS)MSCIJapanrelativetoMSCIACAxJ(RHS)

Source:Refinitiv

Figure11:WeakyenisbadforAxJ

115

105

140

130

120

95

110

85

100

75

90

80

70

65

55

Dec-05Aug-07Apr-09Dec-10Aug-12Apr-14Dec-15Aug-17Apr-19Dec-20

JPYvsUSD(LHS)MSCIACWorldrelativetoMSCIACAxJ(RHS)

Source:Refinitiv

Figure13:WeakyenalsohelpsJapanvis-à-visAxJ

140

130

120

110

100

90

80

70

105

100

95

90

85

80

75

70

65

Apr-09Jul-10Oct-11Jan-13Apr-14Jul-15Oct-16Jan-18Apr-19Jul-20Oct-21

JPYvsUSD(LHS)MSCIJapanrelativetoMSCIACAxJ(RHS)

Source:Refinitiv

Fedhikesareasomewhatlesserconcern

Althoughclearlynegative,Fedratehikesmatterabitlessthantheabovethreefactors.Asia

typicallyperformswellinanenvironmentofrisingratesastheFedusuallyhikesintoastrong

economy(Figure66).ThecurrentsituationdiffersinthattheFedwillbehikingintoslowergrowth.

13June2022

AsiaPacificStrategy6

Figure14:MSCIAxJperformancebeforeandafterFedratehikes

5.0%4.5%4.0%3.5%3.0%2.5%2.0%1.5%1.0%0.5%0.0%

+1m

+3m

-3m

-2m

-1m

+2m

Beforehikes

Afterhikes

Note:Averagesoverpast20years.Source:Refinitiv

Mitigatingfactors

Whilewearecautiousonabsoluteperformance,therearereasonstoexpectAsiatoprovemore

resilienttoaglobaldownturnthaninthepastandtoholditsownagainstglobalmarkets.

Tacticalindicatorsflashingbuysignal

OurTacticalIndicatorsforAxJareflashingafairlyhealthybuysignal(Figure15).Theindicators

haverisentoatwo-yearhighconsistentwithsix-monthreturnsinthehighsingledigits.Fourof

thesixinputsarehighlypositiveatpresent.AlthoughtheCreditSuisseRiskAppetiteIndexis

neutralandtheUSISMnegative,highforeignsellingthepast12months,currencymovements,

valuationsandindexdeviationfromthesix-monthmovingaveragearesupportiveofourindicators.

Figure15:CreditSuisseTacticalIndicators—inbullishterritory

3.53.02.52.01.51.00.50.0-0.5-1.0

-1.5

60%

50%

40%

30%

20%

10%

0%

-10%

-20%

-30%

Dec-08May-10Oct-11Mar-13Aug-14Jan-16Jun-17Nov-18Apr-20Sep-21

Indexofleadingmarketindicators(LHS)MSCIAxJindex6Mforwardreturns(RHS)

Source:Refinitiv,CreditSuisse

13June2022

AsiaPacificStrategy7

EPSunderperformancecouldend

APACEPSrevisionshaveunderperformedtheUSforalmosttwoyearsnow(Figure16).

China’sweaknessexplainsmuchofthepoorperformance,buttherestofAxJhasalsolagged

abitmostofthepastyearFigure17).

Figure16:MSCIACAPACforwardEPSrevisionrelativeto

MSCIUS

110

108

106

104

102

100

98

96

94

92

90

88

Dec-19Mar-20Jun-20Sep-20Dec-20Mar-21Jun-21Sep-21Dec-21Mar-22

Source:Refinitiv

Figure17:MSCIACAxJex-ChinaforwardEPSrevisionrelativetoMSCIUS

110

108

106

104

102

100

98

96

Dec-19Mar-20Jun-20Sep-20Dec-20Mar-21Jun-21Sep-21Dec-21Mar-22

Source:Refinitiv,CreditSuisse

Wethink,however,thatchancesaregoodthatAsianrevisionswillclosethegapwiththeUS

overthecourseoftheyear.

First,commoditypriceinflationcouldslowasglobalgrowthfalls.Thisyear,evenas

commoditiesjumped,theimpactonmarginshaslessenedastheCPIclosedthegapwiththe

PPIandcompaniesacquiredsomepricingpower.

Second,AsiafacesmuchlesswagepressurethantheUS.WhileUSwagegrowthhas

acceleratedsharplysincethepandemic,Asiahasgonefromanenvironmentofhightoslow

wagegrowth(Figure18and19).

Figure18:USwagegrowth

6%

5%

4%

3%

2%

1%

0%

201020112012201320142015201620172018201920202021

Source:CEIC

Figure19:SelectedAxJmarketwagegrowth

14%

12%

10%

8%

6%

4%

2%

0%

20102011201220132014201520162017201820192020

Note:IncludesChina,HongKong,Indonesia,Singapore,Taiwan,andThailand.Weightedby2020GDP;Source:CEIC,CreditSuisse

Third,whilemarginsandcorporateprofitsasapercentageofGDParenearoratall-timehighs

intheUS,Asianmarginsaremiddling,andcorporateprofitsasapercentageofGDParelow

(Figure20-23).

AsiaPacificStrategy8

Figure20:USprofitindicatorsatornearall-timehighs

16%

14%

12%

10%

8%

6%

4%

12%11%10%9%8%7%6%5%4%3%

2%

19601966197219781984199019962002200920152021

USNIPAprofitmargin,non-financialcorporatesector(LHS)

S&Pex-finnetincomemargin(RHS)

Source:Refinitiv

Figure22:Chinacorporateprofitsasapercentageofnationalincome

28%

27%

26%

25%

24%

23%

22%

21%

201020112012201320142015201620172018201920202021

Source:Refinitiv

Reducedexportexposure

Figure21:AxJ12-monthforwardgrossmarginsatthelowend

oftherange

45%

44%

43%

42%

41%

40%

39%

38%Dec-12Dec-13Dec-14Dec-15Dec-16Dec-17Dec-18Dec-19Dec-20Dec-21

Non-financial.Source:Refinitiv

Figure23:AxJex-Chinacorporateprofitsasapercentageofnationalincome

20.4%

20.2%

20.0%

19.8%

19.6%

19.4%

19.2%

19.0%

18.8%

18.6%

201020112012201320142015201620172018201920202021

Source:Refinitiv

Somewhatreducedsensitivitytoexportsshouldinsulateeconomiesmorethaninthepast.Due

todeglobalization,APACexportstotheUSandEuropeasapercentageofGDPhavefallen

sincetheGFC(Figure24).AlthoughAsianmarketshavehistoricallytrackedexportsclosely,the

correlationhasbrokendownsomewhatoverthepast1-2years(Figure25).Shareshaveover-

discountedtheexportslowdownoverthepastyear.

13June2022

AsiaPacificStrategy9

Japan

AxJex-China

US

EU

China

Figure24:APACexportstoUS+EuropeaspercentageofGDP

10%

9%

8%

7%

6%

5%

4%

3%

2%

1%

0%

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Source:CEIC

Superiordomesticgrowthmomentum

Figure25:ShareshavealreadydiscountedanAsianexport

slowdown

60%50%40%30%20%10% 0%-10%-20%

-30%

50%40%30%20%10%0%-10%

-20%

Jan-13Jan-14Jan-15Jan-16Jan-17Jan-18Jan-19Jan-20Jan-21Jan-22

MSCIACAPAC(YoY%,LHS)APACexports(YoY%,RHS)

Source:Refinitiv

KeyAsianmarketshavebettershort-termgrowththantheUS.Whilethetech-oriented

economiesofNorthAsiamightlag,1Hprobablymarksthetroughfordomesticdemandin

China,assumingCovidlockdownsarelessseverein2H,whileASEANshouldseehealthy

deltasongrowth.Asia’ssouthernhalfsufferedmorethanthenorthfromCovidlockdownsand

isexpectedtoseeabiggerbounceaseconomiesreopen.Inaggregate,Asiaoutsidegreater

ChinawouldseeabetterdeltaonGDPthisyearthanDMs,andChinashouldseebettergrowth

sequentially(Figure26).

Figure26:RealGDPgrowth,2022minus2021

1.0%

0.5%

0.0%

-0.5%

-1.0%

-1.5%

-2.0%

-2.5%

-3.0%

-3.5%

-4.0%

Source:IMF,CreditSuisse

Valuationslessstretched

Onmostmeasures,APACvaluationsaremoreattractivethanforglobalpeers.OutsideChina

andJapan,multiplesareaverageorabitexpensive,buttheAPACP/E,P/B,ERPand

earningsyieldgapalllooksuperiortoglobalpeers(Figures27-30).

13June2022

AsiaPacificStrategy10

Figure27:MSCIACAPACforwardP/ErelativetoWorld

5%

0%

-5%

-

10%

-15%

-20%

-25%

Dec-11Dec-12Dec-13Dec-14Dec-15Dec-16Dec-17Dec-18Dec-19Dec-20Dec-21

Source:Refinitiv

Figure29:APACimpliedequityriskpremiumrelativetoworld

3.0%

2.5%

2.0%

1.5%

1.0%

0.5%

0.0%

Dec-11Dec-12Dec-13Dec-14Dec-15Dec-16Dec-17Dec-18Dec-19Dec-20Dec-21

Source:Refinitiv,CreditSuisse

Figure28:MSCIACAPACtrailingP/BrelativetoWorld

-15%

-20%

-25%

-30%

-35%

-40%

-45%

Dec-11Dec-12Dec-13Dec-14Dec-15Dec-16Dec-17Dec-18Dec-19Dec-20Dec-21

Source:Refinitiv

Figure30:MSCIAPACearningsyieldgaprelativetoworld

3.0%

2.5%

2.0%

1.5%

1.0%

0.5%

0.0%

-0.5%

-1.0%

Dec-11Jan-13Feb-14Mar-15Apr-16May-17Jun-18Jul-19Aug-20Sep-21

Source:Refinitiv

Reducedcorrelations

Althoughasustainedtrendisnotyetevident,correlationsofAsianmarketswiththeS&P500

havefallenthisyeartothesecond-lowestlevelsincetheGFC,possiblyinsulatingtheregion

fromglobaltrends(Figure31).

13June2022

AsiaPacificStrategy11

Figure31:MSCIACAPACcorrelationcoefficientwithS&P500

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0.0

201120122013201420152016201720182019202020212022

YTD

Source:Refinitiv

Currenciesarethemostlikelysourceofunderperformance

ThemainrisktoAsia’srelativeperformanceiscurrencies.Astrongdollarwouldcreate

headwindsforAxJ,andourglobalstrategyteamexpectsthedollartoresumeitsappreciation.

Toughtimes,butsourcesofresilience

Inconclusion,globalheadwindsareexpectedtoposeseriouschallengesforabsoluteperformance,

buttherearereasonstoexpectAsiatodonoworsethanglobalpeersandpossiblytooutperform.

Wesetanewend-2022targetfortheMSCIACAPACIndexof170,representingflattish

performancefromcurrentlevels,anddownfromthe212setinNovemberlastyear.

13June2022

AsiaPacificStrategy12

Markets:Domesticdemandandservices

Wefavourmarketswithlargedomesticeconomies,short-termdriversfordomesticdemand,

positiveleveragetoratesandhighservicescomponents.WeretainourtacticalOVERWEIGHT

inChinaandkeepASEANasourfavouriteregion.Wehaveaddedtoourexisting

OVERWEIGHTinThailandandupgradePhilippinestoOVERWEIGHTfromMarketWeight.A

cutinKoreafrombenchmarktoUnderweightfundsourASEANadditions.

KeepingsmallOverweightinChina

OurtacticalOVERWEIGHTinChinarestsonseveralconsiderations:

1.Ithasmovedupinourvaluationsscorecardfromsecond-to-lastinFebruary2021,

whenwecutittoUnderweight,tosecondbestatpresent(Figures32-33).

Figure32:CreditSuissevaluationsscorecardFebruary2021(higherscoreisbetter)

P/B

Dividendyield

Dividendyieldgap

Equityriskpremium

ShillerP/E

Allvaluesin

DeviationDeviationfrom

DeviationDeviationfrom

Deviationfrom

DeviationDeviationfrom

DeviationDeviationfrom

standard

fromAPAC

country'sown

fromAPAC

country'sown

country'sown

fromAPAC

country'sown

fromAPAC

country'sown

Z-score

deviations

average

rolling10Yaverage

average

rolling10Yaverage

rolling10Yaverage

average

rolling10Yaverage

average

rolling10Yaverage

Weighting

0.11

0.11

0.11

0.11

0.11

0.11

0.11

0.11

0.11

Singapore

1.32

0.86

1.95

0.56

1.42

1.45

1.36

1.29

0.64

1.21

Thailand

0.18

0.77

0.43

-0.87

1.36

1.02

2.32

0.78

1.07

0.79

Philippines

0.00

1.14

-0.72

0.11

1.53

0.33

2.13

0.25

1.78

0.73

Indonesia

-0.71

0.98

0.87

1.46

1.64

-1.32

1.07

0.53

1.05

0.62

Malaysia

0.48

0.54

0.47

-0.81

1.32

-0.67

0.36

0.90

1.26

0.43

HongKong

0.94

-0.90

0.41

-0.23

0.82

0.36

0.10

0.44

0.40

0.26

Japan

0.73

-2.01

-0.42

-0.11

0.43

0.60

0.38

-0.79

-0.08

-0.14

Korea

0.97

-1.84

-1.02

-0.02

0.58

0.13

-0.02

0.30

-2.06

-0.33

Australia

-0.26

-2.11

0.46

-3.35

-0.10

0.49

0.84

0.11

-1.42

-0.59

India

-2.19

-2.21

-1.68

-2.38

1.42

-2.00

0.64

-1.63

-3.01

-1.45

China

-0.42

-2.47

-1.01

-3.03

-2.06

-0.79

-2.05

-0.20

-1.65

-1.52

Taiwan

-1.03

-4.38

0.27

-1.68

-0.27

0.40

-0.76

-1.99

-4.58

-1.56

Source:Refinitiv,CreditSuisseestimates

Figure33:CreditSuissevaluationsscorecardatpresent(higherscoreisbetter)

P/B

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