Chart of the day: China falls drag Hong Kong stocks back among Asia's cheapest

The fall in Chinese stock prices has pushed Hong Kong-listed mainland firms back into the Credit Suisse "Cheapest Four" trading basket. Being overweight, the components of the Cheapest Four basket have outperformed the MSCI Asia Ex-Japan Index by 1.9 per cent in the year to date. The Expensive Four basket, meanwhile, has underperformed the index by 1.3 per cent. The model has been running since 2000 and the cheapest four have outperformed 87 per cent of the time over 12 months. The cheapest four are currently the MSCI China, Korea, Taiwan and MSCI Hong Kong. Hong Kong's re-entry to the basket is based on the widening discount the market now has on the Credit Suisse price book-value versus return-on-equity model. It has stretched to 27 per cent from 22 per cent previously.