Under the extremely low interest rate environment and with the recent global risk-off, equity yield is becoming more attractive. We advise long-term investors to accumulate quality companies that can deliver high yield. We have selected 10 high yield stocks that BNPP rates BUY recommendation and that have at least 20% upside potential.

Beta of 1.0659: Investors can consider buy-on-dip on this Asia High Yield Basket. The basket is trading at very tempting valuations of 8.2x P/E and 5.6% dividend yield in 2012. With the high yield spread over deposit rate, we are expecting the basket to be attractive. For relative strategy, the Asia High Yield BUY basket has a beta of 1.0659 over the MSCI Asia ex-Japan, and therefore should rebound better than the benchmark. The Asia High Yield Basket can trade up to USD30m per day, while MSCI Asia ex-Japan Total Return Swap can trade up to USD30m-200m per close (breakable with 30bp break fee).

Eoin Treacy's view Yields on sovereign bonds deemed to offer a safe haven have compressed to unattractive levels for anyone except momentum traders. High quality corporate bond spreads have also compressed considerably over the last few years as fixed income investors quested after higher pay outs.

General Electric offers a good example of this phenomenon. Its 5.3% 2021 fixed coupon bond currently yields 3.14% while its shares yield 3.46% at current prices. Against a background where 10-year Treasuries yield 1.63% the relative attraction of high quality equities is obvious from the perspective of a yield oriented investor.

As the global growth engine, Asia remains an attractive investment destination despite the volatility that has plagued investment returns over the last three years. While the region is not renowned for its dividend policy, this trend is gradually changing as shareholders become more vocal. However, high dividends alone have not been enough to woe investors. Of the 10 shares mentioned as high yielding in the above report most remain in medium-term downtrends which has flattered their yields.

South Korean listed SK Telecom (7.9%), KT Corp (7.1%) and S-Oil Corp (5.4%) have all found at least short-term support following steep declines. Potential for reversionary rallies has increased and sustained move below their respective 200-day MAs would be required to check potential for a further bounce.

Taiwanese listed Formosa Plastics (5.1%) broke downwards in early June but posted an upside weekly key reversal three weeks ago. It has so far failed to follow through to the upside but a sustained move to fresh lows would be required to question potential for additional upside.

Of the Hong Kong listed shares, Hang Seng Bank (5%) has been among the steadiest. It hit a medium-term low in October and has been ranging mostly above HK$100 since January. A sustained move below that level would be required to question medium-term scope for additional higher to lateral ranging.

While Bank of China (6.6%) and ICBC (5.7%) have steadied, they will need to break their three-month progressions of lower rally highs to begin to suggest returns to demand dominance beyond the short term.

Hong Kong Exchange (3.8%) has returned to test the HK$100 area which marked the October low. A sustained move below it would be required to question potential for a further unwind of the short-term oversold condition.

CNOOC (3.5%) has held a progression of higher major reaction lows since October but a progression of lower rally highs since February. It will need to hold above the June low near HK$13.30 if the medium-term upside is to be given the benefit of the doubt.

Yanzhou Coal (5.4%), in common with coal shares globally, continues to trend lower. While overextended relative to the 200-day MA, a sustained move above HK$13 will be needed to begin to suggest a return to demand dominance.

While the above shares represent a cross section of high yielding shares, reliability of dividend increases is at least as important as the absolute level of the yield. The S&P Pan Asia Dividend Aristocrats reflect a reliable track record of dividend increases in the region. The total return Index has been largely rangebound for the last year and will need to hold above 3500 if the medium-term upside is to continue to be given the benefit of the doubt. (Also see Comment of the Day on June 21st and May 30th).