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.
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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 of the returns can be attributed to a few places, with China, Hong Kong and Korea contributing 72 per cent of the total return.
Similarly, breaking performance down by sector, we find that most of the returns can be attributed to a few sectors, with IT, financials, real estate and consumer discretionary contributing 81 per cent of the total return.
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