UBS Equities-Global Equity Strategy _Quantitative Framework and Positioni...-118450063

ab23 October 2025Global ResearchGlobal Equity StrategyQuantitative Framework and PositioningEach month, we update the three key parts of our quantitative framework:1) Scorecards − Our individual scorecards rank sectors based on valuations, sensitivity to our UBS macro scenario, earnings momentum, price momentum (where extreme), positioning and quality fundamentals. The composite scorecard combines all these factors into one overall score.2) Earnings versus Trend − We look at the EPS versus trend to evaluate one element of earnings risk as well as the fit with trend.3) Machine Learning − This looks at which macro variables are the most important to the relative sector returns by refitting and training a machine learning model on a three-month rolling basis. The variables we look at are largely daily macro proxies (such as 2-10 Yield Curve, Hard Data, AI Narrative, China Proxy, Soft Data, US 10y breakeven and US 10y real yield) and are supplied by Sean Simonds (see Tactical Dashboard). This quantitative framework constitutes only one part of our overall weightings analysis.Regions: Japan (where we are underweight) remains at top of our aggregate regional scorecard. It scores top on our MCI scorecard, but we see a sharp tightening of monetary conditions relative to elsewhere. If the UBS house view on Yen and GDP are right then the good ranking on relative economic momentum (number 3, up 2 places) and earnings momentum (number 2) would come under pressure. The UK ranks 2nd (unchanged) but is at the bottom on economic momentum. GEM is third but top on our economic momentum scorecard – up 1 place. We are overweight GEM. The US, where we are benchmark, now ranks fourth, up 1 place on the back of strong relative earnings momentum (number 1), economic momentum (number 2) and relatively low risk appetite, but its valuation is extreme. Europe moved to the bottom of our scorecard (down 1 place) with a deterioration in earnings momentum (bottom place, down 1 place) and second from the bottom on economic momentum but it is the cheapest region (ranks at the top of the valuation scorecard).Sectors: On the cyclical side, we are overweight financials – we have had a very long running overweight of banks in Europe and in Japan (see here) – and of domestic Europe (budget airlines and retailing). We still like the electrification theme. We are marginally overweight of tech – focusing particular on the Asian names. Global Healthcare Equipment ranks second on our aggregate scorecard (we are overweight). We also like household products, flavouring companies (Europe) and select utilities (IPPs in US and T and D in Europe). Crowding: The most crowded region (relative to history) is the US, and the least crowded is Europe. The most crowded sectors (rel. to history) are Autos, Real Estate & Tobacco. The least crowded are Food Producers, Paper and Beverages. Market Direction: Not covered in this scorecard. We expect near-term consolidation (UBS Risk Appetite is clos