2020亚太股市展望

This report has been prepared by UBS Securities Asia Limited ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 38 UBS does and seeks to do business with companies covered in its research reports As a result investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report Investors should consider this report as only a single factor in making their investment decision Global Research 13 November 2019 APAC Equity Strategy Outlook 2020 earnings critical We see low returns in 2020 though the range of outcomes is abnormally high Last year s Outlook was titled From De rating to Re rating With valuations now back at long term averages we think the key driver for Asian equities over the next 12 months will likely be the pace of earnings growth In 2020 UBS expects GDP growth to weaken before picking up later in the year We expect monetary policy to ease further and bond yields to remain well anchored In 2019 companies have responded to intense trade uncertainty by de risking this has meant containing inventory costs and capex Against the backdrop of an improvement in growth later in 2020 this de risked environment would normally be good for profits and equities Unusually however valuations already reflect this Normally multiples are much lower at this point in the cycle Easier monetary policy and low bond yields have supported a re rating to slightly above average forward P E multiples This creates a more confusing environment for equities in 2020 We expect earnings to recover we forecast EPS growth of 8 in Asia ex Japan lower than the consensus 14 but absolute valuations to cap the upside to a modest 7 in our base case Our MSCI Asia ex Japan index target is 700 for end 2020 We expect similar returns in Japan Our Topix index target is 1860 There are several plausible situations where returns could be much better Absolute valuations may appear a little rich but relative valuations look more attractive Any combination of better growth from an earlier cyclical upturn or better trade outcome or even idiosyncratic factors in tech alongside persistently low yields creates scenarios in which equities could once again perform in double digit territory Likewise given the run up in equities in recent weeks a worsening trade outlook and or deterioration beyond our economics base case could take equities closer to recessionary levels around 13 lower than current levels All these outcomes appear plausible to us our confidence in our base case view is lower than normal How do we make money in this environment As the year progresses we anticipate that we would increasingly turn pro cyclical with a north Asian tilt but for now given UBS s caution on the economic backdrop we remain more neutral on cyclicals and defensives Cyclical valuations are not compelling to wait out a short term deterioration in growth Instead we are focused on the more inexpensive cyclicals generally in Materials Industrials sectors that are engaged in self help capex cost inventory discipline beneficiaries of factory relocation and sectors that are delivering strong cash returns At the market level we continue to have a series of paired overweight underweights preferring China to Taiwan Singapore to Hong Kong Indonesia to Australia and The Philippines to Thailand Equity Strategy Asia Pacific Niall MacLeod Strategist niall macleod 852 2971 6186 Matthew Gilman Strategist matthew gilman 852 2971 8173 Jiamin Shen Associate Strategist jiamin shen 852 3712 3126 APAC Equity Strategy 13 November 2019 2 Asia Pacific Equity Strategy Outlook UBS Research THESIS MAP MOST FAVORED LEAST FAVORED China Singapore Indonesia The Philippines Taiwan Hong Kong Thailand Australia PIVOTAL QUESTIONS Q How much do earnings recover We expect earnings to grow 8 in 2020 supported by a bottoming in GDP growth in H1 and improving margins on the back of corporate cost cutting However we see the bigger recovery in earnings occurring in 2021 US China trade tariffs remain a key uncertainty though that we believe will ultimately drive the speed and size of the earnings recovery Q Are valuations already too high Valuations have re rated in anticipation of an earnings rebound We see fair value as 13 2x P E in line with the long run average This is also consistent with where multiples got to in the 2016 17 recovery Although in absolute terms multiples are already on the higher side on a relative basis they continue to look attractive versus other assets and this is an upside to risk to markets in 2020 UBS VIEW End 2020 index target of 700 for MSCI Asia ex Japan After a year of uncertainty in 2019 investors and corporates have de risked and we think this along with growth bottoming in H1 should support Asian equities in 2020 There remains a great deal of uncertainty around the timing of the recovery and trade talks so we set out upside and downside scenarios in the event that growth is stronger than we expect and earnings grow in