ASEAN Will we buy property stocks in Hong Kong and Singapore? No. On a risk/reward basis, property stocks in Jakarta and Bangkok offer equal, if not better, upside potential as they rank better in terms of fundamentals such as valuations and housing affordability, and government policies there are conducive to broadening home ownership.

Property is just one of the sectors with good fundamentals in ASEAN markets. Others include infrastructure investments, distributors of consumer goods, financials, auto and consumption-related sectors. While China's economic cycle is quite mature and the central planners are fighting excesses, consumption and investment cycles are just beginning to pick up momentum in these economies. Liquidity is plentiful and current accounts are strong. ASEAN markets are therefore in the sweet spot of money x confidence. This explains the two-tier market situation in Asia Pacific, with ASEAN bourses outperforming while China, Hong Kong and Taiwan are down year-to-date to end July.

Eoin Treacy's view The two-tier nature of markets has been a thread running through our research for the last few years as clear divergences between winners and losers in the aftermath of the global credit crisis began to emerge. Some of the leaders have been creditor nations, with improving standards of corporate, civil and economic governance with booming domestic growth stories to compliment their healthy export markets. Many of these countries are situated in Asia and ASEAN countries have been among the best performers over this year.

Indonesia pulled back rather sharply on Tuesday but appears to be finding support in the region of the May and June highs and rallied impressively today. This week's low can probably now be viewed as another higher reaction low, within the short-term uptrend from the May nadir. A sustained move below 2900 would be required to indicate that a swifter reversion towards the 200-day MA is underway.

Malaysia has so far held the breakout from the 5-month range and a sustained move back below the 200-day MA, currently in the region of 1285, would be required to question medium-term upside potential.

Thailand continues to rally impressively but is becoming increasingly overextended relative to the 200-day MA as it approaches the psychological 900 and the 2007 highs. However, a sustained move back below 750 would be required to question medium-term potential for further upside.

The Philippines remains in a consistent uptrend and while somewhat overextended compared to the 200-day MA, a sustained move below 3350 would be needed to check momentum beyond a brief pause.

Singapore is testing the upper side of the 8-month range and needs to hold at least half of the recent advance to indicate demand has regained the upper hand.

Vietnam remains the regional laggard. The Index encountered resistance near 600 twice since late 2008 and has been ranging with a downward bias over the last few months. A sustained move above 525 would be required to break the short-term progression of lower rally highs and indicate demand is returning to dominance.