Sector Star Ratings

Star Ratings For The Various Markets

Funds investing into these markets may not be available on our platform as yet but we hope that investors can review these star ratings to understand better our views on the various markets. Regions that our Research team covers.

For Overall Market Summary and Earnings Growth Forecast, click here.

Star Ratings Methodology

Star ratings are ratings we assign to various regional markets (Asia excluding Japan, US, Europe and Japan) and the Technology market to determine their level of attractiveness to an investor assuming a 3-year time frame. However, as our investors get more interested in a number of single country markets, we have carried out increasingly more research on these markets. Thus, we have come up with star ratings for a number of these single country markets on 8th December 2005 to enable our investors to have a clearer research view and enable investors to make better comparisons between the various markets.

Our Methodology

There are also changes to the methodology because previously we relied on two concepts, namely valuations and earnings, to allocate star ratings to the various markets. After adding new markets to the list, we have revamped our methodology. This new methodology enables a more comprehensive analysis of the various markets. We have stated the four factors that we have taken into account and have given scores to each of the factors based on the weightings stated:

1) Valuations (45% weighting)

  • Comparison of earnings yield versus the government bond yield to find the excess earnings yield
  • Comparison of PE ratios on an absolute basis and in comparison to other markets
  • Other considerations (including corporate governance, political factors, market openness)
2) Earnings Growth (25% weighting)
  • Average growth over the next three years
3) Economic Potential (15% weighting)
  • Sustainable average economic growth over the next five to ten years
4) Currency Factor (15% weighting)
  • Whether if the currency invested will appreciate or depreciate against the Ringgit Malaysia in the next 3 years

The star ratings have been adjusted to reflect the new methodology (which is based on a continuous scoring system) and are now as follows:

1 star to < 2 stars - Not Attractive
2 stars to < 3 stars - Neutral
3 stars to < 4 stars - Attractive
4 stars to < 5 stars - Very Attractive

How To Use The Star Ratings In Portfolio Construction?

In general, we continue to advise that investors diversify and maintain exposure in all major markets to minimize the risk of having all their eggs in one basket. However, for the more aggressive investors who wish to take bigger positions in specific regions, we have now assigned stars to the various sectors and regions according to how attractive we feel these regions will be going forward on a three-year time horizon.

These ratings will be updated as and when we feel the relevant market ratings warrant a change. In the context of a portfolio, an attractive to very attractive rating (3 stars to < 5 stars) means that an investor can have more than their long term weighting in that sector. For example, for most investors, we suggest that a long term weighting of 30% of an investor's equity portion be put into Asia excluding Japan. Having a 4.0 star rating in this region means that we suggest that investors who can bear the risk, can consider having more than 30% since Asia excluding Japan is very attractive.

A neutral weighting (2 stars to < 3 stars) within a portfolio means that we see no reason to be overweight on the region, yet, the situation there is not so bad we that would wish to sell out of that region. Hence, the US market, according to our latest rating, warrants 3 stars, which means that if investors already hold up to 30% of their equity portion in US, then they do not really need to adjust their US weighting further.

And a 1 to < 2 stars rating, which means not attractive, will usually mean an investor may wish to consider reducing his investments in that region, or even outright selling off all his investments in that region.

As of 10 Oct 2018 and until further review, our ratings for the various equity markets are as follows:

Regional Star Ratings

Asia ex-Japan -  
Emerging Markets -  
Europe -  
Japan -  
US -  

Single Asian Country/Market Star Ratings

Brazil -  
China -  
Hong Kong -  
India -  
Indonesia -  
Malaysia -  
Russia -  
Singapore -  
South Korea -  
Taiwan -  
Thailand -