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What's driving returns in Asia ex-Japan - place or sector?

Sector dispersion of returns is rising and closing the gap with country dispersion of returns thanks to the IT sector.

Active stock pickers should look for "alpha" in places like China, Korea and Taiwan and "micro-driven" sectors such as IT, health care and consumer discretionary with high firm-specific risk.

ASIA ex-Japan equities have posted a stellar performance year-to-date (up 31 per cent in US dollar terms and 25 per cent in local currency terms as of end-September). However, we find that market breadth has been rather narrow.

Breaking the performance down by country, we find that most...

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