UBS Equities-Global Strategy _Quantamental Signal Ideas - Top Bottom Ra...-117207621

ab12 August 2025Global ResearchGlobal StrategyQuantamental Signal Ideas - Top & Bottom Ranked StocksDetails on the methodology/model can be found in our Q-Series reportWhat are the model's recommendations today?Based on stock-level scores and an optimisation for portfolio balance, we find that the highest-scoring stocks tend to come from sectors such as Utilities, Transportation, Banks and Communication Services. The lowest-scoring stock list is dominated by Consumer Durables, Semis, Commercial Services and Materials stocks. We note these recommendations can differ from the fundamental views of our equity strategy team.Digging into the details, what key message is each signal cohort suggesting?• CTAs are more or less done buying equity indices. This is not the case for our momentum algorithm that wants to buy even more single stocks, across all regions (excl. Europe) and sectors (excl. Staples).• In terms of positioning, Financials continue to be over-owned, Real Estate under-owned, while positioning in Utilities has eased up. The build-up in Communication Services & Materials still looks healthy, ie done at a fair pace when positioning is not crowded yet.• Dispersion in earnings expectations & momentum remains wide across sectors. Latest Q2 reports have not changed the overall picture, although earnings expectations for Health Care (and Consumer Discretionary to a lower extent) have been reassessed lower. • The OECD does not release its CLI numbers in August (July & August data to be published on the 4th September). Using global PMIs to imply this month expected change in the G20 CLI, the probability of a macro-economic slowdown has jumped from 15% to 21%. As a result, our regime model is experiencing a major rotation, taking profits on its long-held cyclical vs. defensive trade.• On valuation, Financials, Utilities & Staples remain the cheapest sectors in our adjusted 12mth fwd PE model, when Tech & Health Care remain the most expensive. Since our last update, relative valuations have slightly improved in Communication Services, and slightly worsened in Energy, Utilities & Health Care.• PMIs, and macro data in general, are a bit all over the place. Global composite PMI new orders came higher in July, printing 51.9 vs. 51.1 in June, while Global Manufacturing PMIs came lower at 49.7, below (already low) expectations. Dispersion across sectors remains key: Health Care, Energy & Real Estate PMIs showed improvements, when Food & Beverages PMIs showed modest deteriorations.What are the industries whose rankings have changed the most?The model is sending mixed signals. While it is adding risk overall, it is lessening its risk-on stance by increasing exposure to defensive sectors - Health Care & Utilities, and slowly reducing exposure to cyclicals - Financials & Consumer Discretionary. The rotation is not only sectoral, but also regional. Japan has become the most favoured equity market, in front of China, while EU keeps being downgraded in our framew