UBS_Equities-Asia_Style_Guide_Quality_and_Momentum_led_the_way_in_Dec_2...-112546302_15页_3mb

UBS Asia Style Guide Summary - January 2025

Introduction:
Focuses on Asian equity markets, highlighting style factors and their performance in December 2024, driven by factors like Quality and Momentum.

Style Factor Performance:

• Quality and Momentum led, with returns exceeding 4.5% and positive gains for most factors in December 2024.
• Key performers Include Quality (6% MoM return, 26.7% YoY gain) and Free Cash Flow Yield (5.1% MoM return, 23.7% YoY gain).
• Other factors such as EPS Growth and Book Value Yield had minimal drawdowns, while Book Value Yield and Composite Value were the worst performers YoY.

Macro Factors:

• Gold was the primary macro driver in December, explaining 22% of market variance, down from 25% in November.
• Pairwise correlations remained stable across most markets, increasing slightly in ASEAN, Taiwan, and India.
• Cross-sectional volatility decreased in Korea, ASEAN, and India but increased elsewhere.

Valuation Changes:

• Valuations generally declined for most Asia markets, with Asia ex-Japan's forward PE rising slightly to 12.5x.
• Health Care sector valuation increased significantly (25.3x PE), while Materials experienced the largest decrease.
• Most quantitative styles saw valuation increases, with Low Price Beta having the highest valuation rise.

Conclusion:
Quality and Momentum factors dominated, with strong performance in December and 2024, while macro influences and valuation trends varied across regions.