In our Star Rating exercise, we look at key valuation metrics like PE and PB ratios, expected earnings growth, along with excess earnings yield to determine how attractive a particular market is. In addition, we consider the economic outlook, generation reforms as well as fiscal and monetary policies in a particular market and tie those stories with our estimates. The Star Rating reflects the upside potential of a market, which is inclusive of valuation expansion, expected earnings as well as expected dividends.

Very Attractive - 5.0 To 4.0 Stars

Asia Semiconductors

We remain highly positive on Asian semiconductors, supported by robust AI hardware and memory demand, with supply constraints expected through 2027. Strong demand across memory, foundry and semiconductor equipment supports pricing power and earnings growth, while multi-year supply agreements provide greater visibility. With the Asian semiconductor sector offering a significant valuation discount to US peers, we maintain our 4.5-star “Very Attractive” rating.

Asia Semiconductors

Singapore

Singapore’s economy remains supported by the AI-led electronics upcycle, strong export growth and contained inflation. Resilient bank and industrial earnings, alongside semiconductor investments and data-centre expansion, support market performance and create opportunities among small- and mid-cap companies. As global equity markets become increasingly concentrated in technology stocks, Singapore offers valuable portfolio diversification. We maintain our 4.0-star “Very Attractive” rating.

South Korea

South Korean equities remain supported by a sustained memory upcycle and record profitability at Samsung Electronics and SK Hynix. Firm DRAM and NAND pricing, alongside multi-year supply agreements, underpin earnings visibility and margins, while rising AI data-centre investment provides an additional demand driver. With the AI investment thesis intact and opportunities extending beyond AI, we maintain our 4.0-star “Very Attractive” rating on South Korean equities.

Taiwan

Taiwan equities remain supported by robust AI-driven semiconductor demand, with TSMC's record revenue growth and pricing power strengthening earnings prospects. Persistent capacity constraints, orders secured through 2027 and expanding AI investment provide greater earnings visibility, while strong exports support economic growth. With earnings forecasts rising faster than the index, valuations have become more attractive. As such, we maintain our 4.0-star “Very Attractive” rating.

Asia ex-Japan

Asia ex-Japan equities remain supported by AI-driven semiconductor demand, led by strong earnings growth in Taiwan and South Korea, with China’s technology and Singapore’s industrials sectors also benefiting. Earnings growth is broadening, while forward P/E valuations have fallen to one standard deviation below their 10-year average. With improving fundamentals and more attractive valuations, we upgrade Asia ex-Japan equities to 4.0 stars “Very Attractive”.

GEMs

Similar to Asia ex-Japan, emerging market equities continue to benefit from strong semiconductor-led earnings momentum in North Asia, alongside broadening earnings growth beyond technology in China. With improving earnings fundamentals and attractive valuations, we also upgrade emerging market equities to 4.0 stars “Very Attractive”.

Singapore

South Korea

Taiwan

Asia ex-Japan

GEMs

Attractive - 3.5 To 3.0 Stars

China

China's K-shaped recovery continues, with AI, semiconductors and high-tech manufacturing driving growth while property investment and domestic consumption remain weak. Resilient exports, improving industrial profitability and targeted policy support underpin the technology-led expansion. As such, we maintain our 3.5-star “Attractive” rating on China equities, reflecting structural growth opportunities despite an uneven economic recovery.

Hong Kong

Hong Kong equities remain supported by mainland China's resilience, improving corporate earnings and sustained southbound capital inflows. Easing competition among internet platforms supports margin recovery, while growing IPO activity in AI, semiconductors and biotechnology provides additional catalysts. With valuations remaining reasonable, we maintain our 3.5-star “Attractive” rating on Hong Kong equities, reflecting improving earnings prospects and further upside potential.

Semiconductors

While elevated valuations previously kept us cautious, stronger guidance has extended the AI earnings runway, and persistent supply constraints across foundry and memory continue to support pricing and profitability. With valuations now lower after the July correction, we see a more attractive entry point to add semiconductor exposure heading into 4Q26. As such, we upgrade the semiconductor sector from 2.5 stars “Neutral” to 3.5 stars “Attractive” to reflect our more constructive stance.

Digital Economy

Internet equities continue to benefit from sustained AI investment, with major cloud computing and cybersecurity companies offering attractive growth opportunities. However, elevated capital expenditure, financing pressures and AI disruption risks warrant selectivity, particularly in software and neoclouds. The internet platforms offer a differentiated source of return, with low valuations providing a potential downside cushion and improving margins and AI monetisation supporting upside.

China

Hong Kong

Semiconductors

Digital Economy

Malaysia

Malaysia equities remain supported by stable domestic fundamentals, resilient exports and improving earnings. Data-centre EPCC projects and power-grid investments underpin near-term earnings visibility, while the KLCI50 expansion creates opportunities among small- and mid-caps. However, escalating geopolitical tensions and higher oil prices could weaken regional demand and consumer confidence. As such, we maintain our 3.0-star “Attractive” rating.

Japan

Japanese equities remain supported by resilient earnings, particularly in AI-driven semiconductor equipment and materials, while corporate governance reforms continue to improve ROE and shareholder returns. The BOJ’s September rate hike to 1.25% reinforces its monetary normalisation path. However, persistent inflation could weigh on consumption, while rising bond yields pose valuation risks. We favour large caps while selectively tilting towards small caps with stronger pricing power.

Malaysia

Japan

Neutral - 2.5 Stars

Global Healthcare

Global healthcare equities have underperformed the broader market in 2026, weighed down by medical technology amid policy headwinds, competitive pressures and company-specific challenges. Meanwhile, strong innovation, funding and M&A activity continue to support pharmaceuticals, biotechnology and life sciences. With fair valuations and earnings expected to rebound in 2027, we maintain our 2.5 star neutral rating on the sector, reflecting balanced opportunities and risks.

Global Healthcare

Not Attractive - 2.0 Stars

India

India remains our least preferred market in the region, given its limited exposure to the AI-driven earnings upcycle and persistent macroeconomic headwinds. Elevated oil prices are widening import costs, adding pressure on the rupee and inflation, while tighter monetary policy threatens domestic consumption and corporate margins. Valuations remain relatively expensive compared with other emerging markets, offering limited compensation for these risks.

Global Financials

Global financials remain supported by resilient bank earnings and healthy credit conditions, although growth catalysts are maturing. With limited further net interest margin expansion, net interest income increasingly depends on loan growth, which faces pressure from elevated borrowing costs. Investment banks and life insurers offer selective opportunities through capital-markets activity and higher reinvestment yields. As such, we maintain our 2.0-star “Not Attractive” rating.

ASEAN

ASEAN equities present an uneven outlook, with Singapore and Malaysia providing the strongest support through resilient earnings, electronics exports and infrastructure investment. Meanwhile, weak consumption in Thailand and currency pressures in Indonesia constrain regional growth prospects. With AI-related opportunities concentrated in selected industries, selectivity remains key. As such, we maintain our 2.0-star “Not Attractive” rating.

Europe

European equities have shown greater resilience than expected, supported by improving economic activity and a broadening earnings recovery. However, ongoing geopolitical tensions and elevated energy prices continue to fuel inflation, pressure household spending and raise the risk of further ECB tightening. While defence, infrastructure and selected tech leaders offer selective opportunities, these headwinds limit broader upside potential.

US

The US economy remains resilient, supported by growth and corporate earnings, although persistent inflation and labour market strength keep interest rate risks elevated. We favour AI-driven internet and semiconductor companies but remain cautious on consumer discretionary and unprofitable high-growth stocks. Elevated valuations relative to Asia support our underweight stance on the broader US market, favouring high-quality companies with strong balance sheets and resilient earnings.

India

Global Financials

ASEAN

Europe

US