In today’s briefing:
- Asian Equities: Earnings Estimate Upgrades Climbing, but Slowly and Selectively
- Peering into 2026: Momentum Tailwinds
- The Challenges of Narrow Breadth
Asian Equities: Earnings Estimate Upgrades Climbing, but Slowly and Selectively
- Midway through the 3Q25 result season, eighteen Asian market-sectors have reported consensus EPS estimate upgrades over past one, three and six months. A quarter ago, we identified 11 such sectors.
- Eleven of these sectors are from HK/China, Korea and Taiwan. Seven are from ASEAN markets, dominated by Thailand. India and Singapore are conspicuous by their absence.
- Among the notable sectors with EPS upgrades, Chinese base metals, HK/Chinese and Korean financials, Chinese pharmaceuticals, Korean and Taiwanese technology, Thai utilities and communication and Philippines transportation stand out.
Peering into 2026: Momentum Tailwinds
- We are bullish on the S&P 500 into year-end and into the early part of 2026.
- A combination of easy monetary policy and fiscal policy represents reflationary macro tailwinds.
- The stock market is also enjoying support from positive price and fundamental momentum.
The Challenges of Narrow Breadth
- We have heard many concerns from chartists in the past few months about the narrow nature of breadth in the U.S. equity market.
- Investors need to distinguish between narrow relative leadership and weak breadth. While leadership is narrow, absolute breadth remains positive.
- We reiterate our view that equity investors should adopt a barbell strategy of overweight U.S. large-cap growth and non-U.S. developed market value stocks.
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