UBS Equities-Global Style Guide _Japan is leading the global rally_ Winte...-117581093

ab1 September 2025Global ResearchGlobal Style GuideJapan is leading the global rallyGlobal markets outperform in AugustGlobal equity markets continue the upward trend in August with a monthly return of 2.1%. All regions are up for the month, with Japan significantly leading the global outperformance (4.3%). Regional year to date returns range from 10.0% and 16.7%. Turning to sectors, Utilities and Industrials are the two sectors down in August, all other sectors outperform with Materials dominating the rally (6.1%). Focusing on sector returns for 2025, the leading sector is currently Communication Services 18.9% (previously Industrials), closely followed by Financials (17.6%). Health Care is the only sector with negative year to date returns (-0.1%). Great month for Value, poor for MomentumValue factors dominate in August with Free Cash Flow Yield (12 month trailing) generating 4.7%. Risk factors also outperform with Low Price Beta yielding the largest return of 2.6%. Growth and Momentum underperform in August, and returns are particularly poor for Momentum with all factors declining by more than 4%. Size also underperform (-1.6%) where as Quality show mixed results depending on the specific factor; Delta Quality (1.5%) and High Quality (-0.8%). Equity prices are elevated compared to history, especially in AustraliaIn August, macro factor importance was significantly dominated by U.S. Yield 2Y. Cross-sectional volatility increase for most regions except Europe, where as pairwise correlations were mostly flat. Equity prices remain elevated relative to long-term averages, especially in Australia. Turning to factors we find that all factor forecast PEs for August, except Low Price Beta, are well above historical averages. Figure 1: Style Factor Performance Last Month - WorldSource: FactSet, UBS Quantitative DatabaseThis report has been prepared by UBS Securities Australia Ltd. ANALYST CERTIFICATION AND REQUIRED DISCLOSURES, including information on the Quantitative Research Review published by UBS, begin on page 12. 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.EquitiesGlobalQuantitativePaul WinterAnalystpaul-j.winter@ubs.com+61-2-9324 2080Oliver Antrobus, CFAAnalystoliver.antrobus@ubs.com+61-3-9242 6467Amanda BelcaidAnalystamanda.belcaid@ubs.com+44-20-7568 3072Cathy Fang, PhDAnalystS1460518100001cathy.fang@ubs.com+86-21-3866 8891Ariel Goyeneche, PhDAnalystariel.goyeneche@ubs.com+49-69-1369 1275Sebastian HohmannAnalystsebastian.hohmann@ubs.com+41-44-234 5000Jaiwish NolanAnalystjaiwish.nolan@ubs.com+1-212-713 1489Daniel PerryAnalystdaniel.perry@ubs.com+44-20-7901 6263Will StephensAnalystwill.stephens@ubs.com+852-3712 3892Christine VargasAnalystchristine.vargas@ubs.com+44-20-7568