HONK KONG VS THE US As bargains are found exploring hated factors, industries, or geographies, Asia seems to be a go place to begin with. Comparing the Hong Kong stock index with the S&P500 (via the HSI-to-SPX ratio), one would easily spot a stunning deviation. Indeed, while the ratio has evolved most of the time within +/- 2 standard deviations around its long-term trend (1 line = 2σ) from 1987 to 2021, the ratio has recently made a double top 10σ above it. Both the extreme upside deviation and the double top make a downside move the most likely scenario. Speaking about relative values, this move could be made via a combination of lower US stocks and higher HK ones. What's the potential payoff? Well, while none knows where the move could stop, reaching its former bottom would imply a 80% underperformance for US stocks, or a 400% outperformance of HK stocks. While this figure is an extreme case, it has the advantage of giving the an idea of the range of possibilities. Pick your most likely scenario. $EWH $SPY