Eoin Treacy's view

The US Dollar declined for much of the decade from 2000 as the USA dealt with twin busts and money policy that deliberately targeted a weak currency as a policy objective. The relative attraction of other currency markets was therefore burnished. Investors became accustomed to an environment where currency market and capital market appreciation contributed to total return.

As an end to extraordinary monetary accommodation is being considered, investors have been forced to reassess the attraction of investing in markets where currency appreciation is no longer so reliable. This has contributed to a loss of consistency for a number of ASEAN markets. Prospects for individual countries are now being assessed on their individual merits.

Hong Kong continues to maintain a currency peg with the US Dollar and there does not appear to be any prospect of the situation changing in the short to medium-term. As a result it represents a relatively attractive destination from the perspective of someone worried about currency market gyrations. The fact that the Hang Seng (P/E 10.78, DT 3.25%) and China Enterprises (H-Share P/E 8.53, DY 3.61%) indices are also trading on historically low valuations and testing the upper side of medium-term ranges is an additional point in their favour.