2023 Global Equity Outlook

Global Markets Strategy
01 December 2022
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Global Equity Strategy

2023 Global Equity Outlook
2022 was a year of macro and geopolitical shocks with sharply higher global rates and Equity Macro Strategy
USD, stubbornly high inflation, China headwinds, and the largest conflict in Europe
since WWII. Investors responded to these events by derating S&P 500 P/E as much as Dubravko Lakos-Bujas AC
(1-212) 622-3601
7x while some speculative growth segments crashed 70-80% from highs. Although
dubravko.lakos-bujas@jpmorgan.com
fundamentals have been resilient throughout these shocks, we do not expect this year’s
J.P. Morgan Securities LLC
constructive growth backdrop to persist in 2023. Fundamentals will likely deteriorate
as financial conditions continue to tighten and monetary policy turns even more Mislav Matejka, CFA AC
restrictive (Fed raises rates by another 75-100bp with an additional ~$1T in QT), (44-20) 7134-9741
while the economy enters a mild recession with the labor market contracting and mislav.matejka@jpmorgan.com
unemployment rate rising to ~5% (Economic Outlook). JPM economics projects Bloomberg JPMA MATEJKA <GO>
inflation of ~5.0% by Mar’23 with Fed Funds target rate at 5.0% — effectively, it J.P. Morgan Securities plc
amounts to 5.9% increase in real rate in this cycle or the highest real hike in over 40 Wendy Liu AC
years, an extremely restrictive change in policy in one year by any account. Further, (852) 2800-1087
consumers have mostly exhausted post-Covid excess savings and for the first time are wendy.m.liu@jpmorgan.com
getting hit by a broadening negative wealth effect from all assets simultaneously (e.g., Bloomberg JPMA WLIU <GO>
housing, bonds, equities, alternative/private investments, crypto). The proverbial J.P. Morgan Securities (Asia Pacific) Limited/
snowball should continue to gain momentum next year as consumers and corporates J.P. Morgan Broking (Hong Kong) Limited
more meaningfully cut discretionary spending and capital investments. Thus, we are Pedro Martins Junior, CFA AC
reducing our below consensus 2023 S&P 500 EPS of $225 to $205 (vs. IBES (55-11) 4950-4121
consensus of $231) on weaker demand and pricing power, further margin pedro.x.martins@jpmchase.com
compression, and lower buyback activity. Upside and downside to our base case will Bloomberg JPMA MARTINS <GO>
largely depend on the depth and length of the recession and the speed of the Fed’s Banco J.P. Morgan S.A.
counter-response. Nonetheless, we expect market volatility to remain elevated (VIX Global Markets Strategy
averaging ~25) with another round of declines in equities, especially after the run-up Marko Kolanovic, PhD
into year-end that we have been calling for and the S&P 500 multiple approaching 20x (1-212) 622-3677
(see Equity Strategy – Disinflation). More precisely, in 1H23 we expect S&P 500 to marko.kolanovic@jpmorgan.com
re-test this year’s lows as the Fed overtightens into weaker fundamentals (Market J.P. Morgan Securities LLC
Outlook). This sell-off combined with disinflation, rising unemployment, and
declining corporate sentiment should be enough for the Fed to start signaling a
pivot, subsequently driving an asset recovery, and pushing S&P 500 to 4,200 by Other Contributors
year-end 2023. Adrian Huerta - Mexico Strategy
Arun Jain - US Strategy
Cross-Regional Equity Strategy — the convergence between the US and Bhupinder Singh - US Strategy
International markets should continue next year both on USD and local currency Bram Kaplan - US Deriv Strategy
basis. S&P 500 risk-reward relative to other regions remains unattractive. Within David Aserkoff - CEEMEA Strategy
developed markets, UK is still our top pick. Continental European equities have a Diego Celedon - SC/AN Strategy
recession to negotiate and geopolitical tail risks, but Eurozone has never been this Eduardo Lecubarri - SMid Cap Strategy
attractively priced vs the US. Japan should be relatively resilient due to solid Emy Shayo - LatAm Strategy
corporate earnings from the economy’s reopening, attractive valuation, smaller Jason Hunter - Technical Strategy
inflation risk vs other markets, JPY weakness to benefit earnings until mid-2023, and Jason Steed - Australia Strategy
an upcoming end to YCC could be seen as a positive. As for Emerging Markets, its Kamal Tamboli - US Strategy
recovery is mostly linked to China. Tactically, the Asia reopening trade led by Khuram Chaudhry - Europe Strategy
China is overdue and the activity hurdle rate is very easy, with further policy Mixo Das - Asia xJP Strategy
support likely. We expect ~17% upside for China by end of 2023, driven by 14% Narendra Singh - US Strategy
Prabhav Bhadani - Europe Strategy
EPS growth and a P/E of 10.5x. JPM estimates China’s GDP to increase from 2.9%
Rajiv Batra - ASEAN Strategy
y/y in 2022 to 4% in 2023, with consumption being the biggest marginal contributor.
Rie Nishihara - Japan Strategy
Also, we see a very positive setup for Latin America equities going into 2023. The
region will enter a monetary policy expansion phase, in contrast to DM, and probably
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Dubravko Lakos-Bujas Global Markets Strategy
(1-212) 622-3601 01 December 2022
a more aggressive one than other EMs. In particular, Brazil has attractive valuation Figure 1: 2023 Equity Price Targets
ahead of a rate easing cycle and is highly levered to China reopening, while fiscal % upside as of Nov-28
policy risk is likely to be mitigated by a conservative congress. Over the longer term, '23 PT % Upside '23 EPS YoY Gth
however, a sustained EM outperformance versus DM remains challenged on many US $4,200 6% $205 -9%
fronts including structural growth pressures and de-globalization. Eurozone € 256 6% € 17.80 -10%
UK £8,150 9% £676 -10%

Business Cycle — JPM Regional Business Cycle Indicators (QMIs) are in
JP ¥2,100 5% ¥149.0 -4%
contraction (below average and falling). US QMI leads EPS year-on-year change
EM $1,060 14% $82 -1%
by ~9 months and the decline so far predicts further slowdown in EPS growth
extending into next year. In fact, the current value for the indicator implies flat EPS China HK$66 17% HK$6.10 14%
growth by Jul’23. A further contraction in QMI beyond the lows of mid-2019 by Asia ex-JP $630 6% $46 5%
1Q23, i.e. a significant slowdown from here, could easily presage -9% EPS growth ASEAN $650 1% $40 5%
for 2023. While the US QMI Growth sub-component has negative momentum and is CEEMEA $220 13% $28 7%
in contraction, its level is still better than past intra-cycle slowdowns (e.g., in 2015) LatAm $2,600 21% - -6%
and significantly above recession territory. However, if inflation stays elevated, real
growth could be the last shoe to drop as the Fed continues to increase the cost of
Figure 2: Regional Style Views for 23
capital to the point of tipping the cycle into a recession. Outside the US, central Size
Style
banks are tackling global inflation while their economies are facing the strongest Views
Value Growth Quality (Small
vs Lrg)
growth headwinds since the GFC. Europe QMI is at levels last seen in 2008 and US OW OW GARP OW QARP N
2020, and it bottoms only after the yield curve steepens, never before. As of now, Europe OW N N N
the yield curve remains inverted. Even when the Fed eases policy it often takes time JP OW N OW N
before macro and profits data trough. Asia QMI is showing early signs of EM OW OW UW N
China UW OW N OW
bottoming but only an upturn in the global business cycle would provide a
Asia ex-JP OW N OW N
sustained recovery. For 2023 EPS, China’s cyclical upturn and still low input cost SE Asia OW N OW N
trends should lend support to topline and margins, with offsets from weaker global LatAm OW N UW OW
demand, higher financing costs in the region ex-China and likely higher credit costs
in region. Diffusion indexes based on global leading indicators (Figure 16) and Figure 3: Regional Sector Views for 23
central bank tightening show concurrent broad global economic distress – it is a Sct
US Europe Japan China EM
small consolation that the US cycle appears more resilient in comparison and that Views
OW OW N OW OW
might explain the relative attractiveness of US financial assets and USD’s EN
MT N OW OW OW N
appreciation since mid-2021.
ID UW UW N OW N
CD UW N UW OW OW
 Volatility Outlook — in 2022 we saw the emergence of a new, higher volatility
CS N UW OW N UW
regime as the macro economy was buffeted by multiple shocks, including the most OW N OW UW UW
HC
aggressive central bank hiking cycle in decades, the war in Ukraine and its impact IT N N N N OW
on commodity flows/prices, stubbornly high inflation, weakening growth, a strong TS N OW N OW N
USD, and lingering COVID-related disruptions. As a result, the VIX has averaged UT OW OW OW N UW
~26 in 2022 YTD (up from an average of ~19.5 in 2021), spending most of the RE UW UW UW UW N
year trapped in a 20-35 range. One of the most important drivers of equity
volatility is the level of monetary accommodation, with average VIX levels Figure 4: Key Themes for 2023
generally following the levels of interest rates with a lag. Given the combination of Them es BBG Tickers
tight monetary policy, a weakening macro environment and still structurally weak
Global – JP GLCHRO
market liquidity, for 2023 we expect volatility to remain above its long-term
US – JP USCHRO
average, with the VIX averaging ~25 in our baseline forecast scenario. The China Reopening
DM xUS – JP DUCHRO
VIX is likely biased higher than this in the early part of the year as we expect
equity markets to fall through this year’s lows, and then biased below this average EM – JP EM CHRO
once central banks pivot and markets recover. The full year average will depend Nearshoring Global – JP GNEARS
on how long it takes for central banks to pivot to an easing bias, and how Beneficiaries US – JP UNEARS
long/deep any drawdown in equity markets lasts. If the Fed pivots early next year Deglobalization Global – JP GDGLOB
in response to some combination of rapidly cooling inflation and a sharp market Underperformers US – JP UDGLOB
sell-off, the full year VIX average could come in lower, while if monetary policy Food Security
continues to tighten well into next year, we could see average volatility levels Global – JP GFOODS
Providers
above our target.
Source: JPMorgan Equity Macro Research
J.P. Morgan Research does not provide
Inflation, Real Rates, the Yield Curve, and a Fed Pivot — Inflation has been the research coverage of these baskets and
key macro factor driving asset markets since early-2021 but the tide is finally investors should not expect continuous
turning. Our Quant Inflation Index (QII) captures the closing demand-supply analysis or additional reports relating to them.
imbalances and predicts a transition from inflation to disinflation (see here for
2
(1-212) 622-3601 01 December 2022
the report which also discusses the implications for asset prices). However, no one Figure 5: JPM Regional Business
knows how quickly and how low inflation might go down given a host of potential Cycle Indicators (QMIs)
exogenous shocks (e.g. energy supply disruptions, friction among major powers,
deglobalization and nearshoring, less cost-efficient restructuring of supply chains etc.)
This also makes the timing of the Fed’s transition from hiking rates to a pause and an
eventual pivot to lower rates uncertain.
 History is not very informative about how inflation might evolve through the
current Fed rate hike cycle. For one, at the start of the current hiking cycle,
inflation was higher than any time in the last three decades. Peering back into 1970s
and early 1980s, most of the hiking cycles were stop-and-go with rate hikes reversed
Figure 6: JPM Quant Inflation Indicator
after a few months. Inflation was often higher at the end of the cycle than at the
(QII)
beginning (Figure 23). Even during two relatively long hiking cycles – Mar’72-
Sep’73 and Dec’76-Dec’79 – core inflation was flat to higher by the last hike
compared to the start, 3.2% from 3.3% and 10.7% from 6.3%, respectively (headline
inflation was 7.4% from 3.5% and 12.6% from 4.9%). The crucial difference
between these episodes and now is that inflation expectations were much higher in
the past. This suggests inflation expectations are more important than actual inflation
prints in calibrating the Fed’s response going forward though the level of inflation
obviously matters.
 Real policy rate provides better clue about how Fed hiking policy might evolve Figure 7: Household “Excess”
over time – it is getting very restrictive. Historically, on average, real short-term Savings Likely Gone by Mid-2023
rate (rate less core CPI inflation) rose by 2.0% and just 0.7% before pausing during Savings recent trend assumes a decline at
rising (1965-1982) and falling (1983-1993) inflation environments, respectively the 2022 rate
(Table 1). In stable inflation backdrop (1994-2020), real rates were, on average,
1.8% higher when hikes were paused. Real short-term rates have already risen by
3.5% (to -2.4% from -5.9%) Mar’21-Nov’22 making it the fifth highest increase
since 1958. The highest ever jump was a Volker hike in late-1980 which took real
rates 10.2% higher by raising policy rate to 20% from 10% in four months. JPM
economics projects inflation of ~5.0% by Mar’23 with Fed Funds target rate at 5.0%
as well, i.e. real short-term rate of 0%. Effectively, it amounts to 5.9% increase in
real rate in this cycle or the highest real hike in over 40 years, an extremely
restrictive change in policy in one year by any account. Essentially, this increases the
probability of a sharp slowdown in 2023 and may cause the Fed to pivot sooner than Source: JPMorgan Equity Macro Research
many expect.
 Yield curve inversion also suggests a Fed pivot soon. Yield curve is among the
most reliable predictors of a slowdown, potentially a recession, ahead. The 10-
year/2-year yield spread inverted in Jul’22 for the first time in this cycle; the
November average spread of -62bps is near an all-time extreme (0.5%ile relative to
history since 1962). The 10-year/3-month spread has also inverted in Nov’22, an
ominous sign given its slightly better predictive record in academic studies. While a
recession is not a foregone conclusion, many of the mitigating factors noted in our
2019 report Implication of Yield Curve Inversion are missing now. Most important,
global monetary policy is in a tightening phase (it was easing in 2019). The full-term
structure of yield is the most inverted since 1960s except for Dec’78 and Nov’80
yield curve inversions making this episode quite distinct from Jun’19 (Figure 19). A
recession prediction based on diffusion of yield inversions along the curve is also
flashing red (Figure 20). Lastly, the large excess household savings, a useful cushion
against any unforeseen loss of income or employment, is eroding rapidly (Figure
15). In sum, the Fed may pivot to pause and perhaps easing faster than currently
anticipated.
Global Earnings Outlook — After resilient earnings across the world in 2022 (MSCI
World +10% y/y), we are modeling below consensus earnings growth next year
with recession as a base case for the US and Europe (-9% for US, -10% for
3
(1-212) 622-3601 01 December 2022
Eurozone, -4% for Japan) while emerging markets should deliver stronger growth
on delayed China reopening (China +14%, CEEMEA +7%, ASEAN +5%).
Consensus estimates in DM should be revised down sharply with decelerating
global business cycle, tightening financial conditions, and rising risk of a consumer led
recession. Corporate guidance early next year should be a catalyst for broader negative
earnings revisions. However, earnings should be more resilient than typically seen
during recessions due a disinflationary rather than a deflationary backdrop (pricing and
FX more support than typically seen during slowdowns). Also, corporates and
consumers have been adjusting their behavior to align spending ahead of the most
well-telegraphed recession risk next year. Thus, we believe our ~10% earnings decline
next year in the US is more likely than the ~20% decline seen in a typical recession. In
the US, we are modeling low-single-digit revenue growth, further normalization in net
income margin of ~100bp after ~50bp margin erosion this year (e.g. negative operating
leverage, rising wages, interest expense, higher effective tax rate), and lower capex and
shareholder return (buybacks -25%; dividends unchanged). On a more positive note,
we expect DM fundamentals to rebound in 2024 and investors should increasingly look
to it for valuation support (2024 EPS: S&P 500 +12%, Europe +15%, Japan +7%,
China +12%, LatAm +20%, CEEMA +7%, and ASEAN +10%).
Style Outlook — Inflation, subsequent restrictive CB policy and recession fears

continue to drive style returns globally with dispersion across regions. While inflation
and higher rates favor Value over Growth and Quality, recession fears favor Quality
over Value. In the current higher rates environment, we expect expensive long duration
stocks to continue underperforming Value although to a lesser degree than this year.
For example, long duration Hyper Growth that experienced colossal de-rating will
likely remain under pressure relative to cheaper Secular Growth (GARP) until a Fed
pivot (i.e. rate cut). The subsequent tranches of long duration Growth stocks could still
face pressure from prolonged higher rates. If the likelihood of recession increases,
exposure to cheaper Quality (i.e. QARP) will be prudent over Expensive Quality due to
their relative duration exposure. Once the business cycle re-enters recovery, cyclical
Value and beaten down cheap long duration Hyper Growth will likely rally relative to
Expensive Quality stocks. In summary, within the US we continue to favor Cheap
over Expensive, Value within Defensives (QARP), Value within Cyclicals (i.e.
Energy) and Value within Growth (GARP). We caution against exposure to high
Beta until the cycle bottoms. In Europe we currently favor High Quality on the
concern that European QMI is yet to signal Recovery – a likely scenario at some point
in 2023 when Quality will underperform Value. In Asia, we prefer Value over Low
Vol/Momentum. A Recovery suggests that market internals may switch from “late
cycle” conditions of 2022 to “early cycle” conditions. In this transition, we recommend
Value over Low Vol / Quality in Asia. Among growth names, we prefer stocks with
stable and positive free cash flows and little refinancing needs trading at reasonable
valuation (GARP).
Sector Outlook — In-line with Style views, our sector recommendations hinge on a
preference for Cheap over Expensive in an absolute sense (i.e. Healthcare as ‘Value’
within Long Duration/Secular Growth) and relative sense (i.e. Utilities over Real
Estate as ‘Value’ within Defensives). While the thesis last year centered on economic
growth recovery and reflation, we have generally curtailed US exposure to Cyclicals
(e.g. Industrials to UW) given aggressive Fed action / strong USD and subsequent
business cycle slowdown. In our view, the key catalysts impacting sector positioning
that investors should be on the lookout for are Fed pivot, China reopening and global
inflation trends.
 Energy has been the strongest performing sector globally supported by the ongoing
Covid recovery, rising geopolitical tensions and still ‘tight’ supply and demand
dynamics. We continue to believe that the energy crisis is far from being fully
resolved with energy fundamentals still bullish globally. Going into 2023, we
specifically prefer European/EM/China Energy over US Energy.
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(1-212) 622-3601 01 December 2022
 We are overweight Healthcare in US/Japan/SE Asia for its defensive growth

properties, high screening across key characteristics (i.e. growth, value and quality)
and reasonable valuation. European Health Care is also likely to trade better in an
environment of stalling yields. Note, we are more cautious on the sector within
EM/China/Asia ex-Japan.
 From a relative value perspective, we prefer Utilities over Real Estate outside of
EM/LatAm given Real Estate’s mismatch between cap rates and high borrowing
rates for longer, business cycle sensitivity and slowdown in new investment.
European Utilities in particular have been hurt recently due to regulatory overhang,
however we believe that the sector benefits from a strong earnings tailwind and
should outperform going forward.
 We prefer Staples over Discretionary given multiple headwinds for Discretionary
around margin pressure (e.g. slowing demand, higher labor costs, etc.), slowing US
consumption/reduced excess household savings, higher expected unemployment and
rising cost of capital. However, we expect the risk for Staples underperformance in
2H23 to rise assuming a Fed pivot as rates becomes less of a headwind and growth
normalizes.
 We are underweight Industrials in the US/Europe/LatAm given slowing global
business cycle, sensitivity to USD, and slowing end-market unit demand ex-
Aerospace. We expect US/Europe Aerospace/Defense to be more resilient despite
broader trends in the sector given its relative immunity to macro, strong
fundamentals, and more favored treatment versus Defensives/Staples through a
business cycle.
 While Technology/Communications significantly underperformed this year, we
expect key headwinds such as rates/USD to be less pronounced next year and
maintain both as neutral in the US. Globally, we have a positive bent towards
Communication, specifically Telcos in Europe/Japan/China. In particular, European
Telcos is starting to see some pricing power, FCF generation remains strong and
there could be more upside from potential consolidation.
 After the strong outperformance of US and European Financials this past year
(7.5% and 7.0% vs mkt respectively), we are moving the sector to neutral given
slowing growth, rising delinquencies/charge-offs, payout constraints, yield curve
inversion and higher investor scrutiny around balance sheets. For investors looking
to gain exposure to the space, we recommend Japan/EM/LATAM as potential
relative regional winners versus US/European peers.
Themes — (1) The easing of China’s zero-Covid policy will likely jumpstart Asia’s
growth engine. This policy action has significant upside implication for many stocks
around the world. We constructed three regional “China Reopening Beneficiaries”
baskets namely, US, DM ex-US and EM (see stock screens on pg 38-40). (2) On the
macro front, inflation and rates continue to be the key drivers of equity
performance. Inflation sensitive stocks, both winners and losers, will continue to
provide relative performance contingent on the inflation prints and headlines (see pg
10). If the Fed keeps rates higher for longer to combat inflation, only stocks with
superior credit profile and robust margins should be resilient to the downside risk to
equities. (3) As the de-globalization trend maintains momentum, corporates will
likely surrender to the protectionists’ agenda and build more resilient and diversified
supply chains to avoid being held hostage to changing local laws or other bottlenecks.
This adjustment in supply chain and localizing the manufacturing should result in
‘Nearshoring Beneficiaries’ and ‘Deglobalization Underperformers’ (see stock screens
on pg 41-43). (4) Similarly, the stocks that are currently resilient to disruptions in
agriculture/fertilizer supply due to Europe conflict should continue to gain market
share and be rewarded by investors (see stock screen on pg 44).
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(1-212) 622-3601 01 December 2022
Table of Contents
Index Price Targets, EPS Forecasts & Style / Sector Views .7
Regional Price Targets and EPS Forecasts ...............................................................7
Regional Style Views ..............................................................................................7
Regional Sector / Industry Views.............................................................................8
Key Equity Themes for 2023....................................................9
Global Thematic Baskets.........................................................................................9
Regional Thematic Baskets ...................................................................................10
Regional Equity Outlooks......................................................12
US Equity Strategy................................................................................................12
Cross-Regional / Europe Strategy ..........................................................................18
Japan Strategy.......................................................................................................20
Emerging Markets Strategy ...................................................................................22
China Strategy ......................................................................................................24
Asia Strategy.........................................................................................................27
SouthEast Asia Strategy ........................................................................................30
Australia Strategy..................................................................................................32
Emerging Europe, Middle East, and Africa Strategy ..............................................33
Latin America Strategy..........................................................................................34
Equity Index Technical Strategy............................................................................35
Global / SMid Strategy..........................................................................................36
Thematic Tradeable Baskets .................................................38
China Reopening Beneficiaries..............................................................................38
Nearshoring Beneficiaries .....................................................................................41
Deglobalization Underperformers..........................................................................43
Food Security Providers ........................................................................................44
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Index Price Targets, EPS Forecasts & Style / Sector Views

Regional Price Targets and EPS Forecasts
Figure 8: JPM Regional Price Targets and EPS Forecasts
Price upside as of as of 28-Nov
US Eurozone UK JP EM China Asia ex-JP ASEAN CEEMEA LatAm
Analyst Lakos Matejka Matejka Nishihara Martins Liu Liu Batra Aserkoff Shayo
Index S&P 500 MSCI Eurozone FTSE100 TOPIX MSCI EM MSCI China MSCI AXJ MSCI AC ASEAN MSCI EMEA MSCI LATAM
2023 Price Target $4,200 € 256 £8,150 ¥2,100 $1,060 HK$66 $630 $650 $220 $2,600
% upside ~6% ~6% ~9% ~5% ~14% ~17% ~6% ~1% ~13% ~21%
JPM EPS $225 € 19.80 £751 ¥155.1 $83 HK$5.33 $44 $38 $26
2022
Consensus EPS $221 € 19.90 £779 ¥155.5 $83 HK$5.33 $46 $38 $26
JPM EPS $205 € 17.80 £676 ¥149.0 $82 HK$6.10 $46 $40 $27.8
YoY Growth ~-9% ~-10% ~-10% ~-4% ~-1% ~14% ~5% ~5% ~7% -6%
2023
Consensus EPS $232 € 20.40 £758 ¥161.6 $84 HK$6.13 $50 $44 $27.0
YoY Growth ~5% ~3% ~-3% ~4% ~1% ~15% ~9% ~15% ~4% -11%
JPM EPS $230 € 20.50 £710 ¥160.0 $93 HK$6.81 $48 $44 $29.77
YoY Growth ~12% ~15% ~5% ~7% ~13% ~12% ~4% ~10% ~7% 20%
2024
Consensus EPS $254 € 22.10 £776 ¥173.1 $94 HK$6.97 $56 $48 $28.39
YoY Growth ~9% ~8% ~2% ~7% ~13% ~14% ~12% ~10% ~5% 15%
Source: J.P. Morgan Equity Macro Research
Regional Style Views

Figure 9: JPM Regional Style Views
Style Views US Europe JP EM China Asia ex-JP SE Asia LatAm
Strategist Lakos Matejka Nishihara Martins Liu Liu Batra Shayo
UW: UW Financials, the biggest Value
OW - Expensive to component, where China's physical property
continue market weakness may weigh on returns in
Value OW OW OW OW OW OW
underperforming 2023, offset by OW Value in Energy,
Cheap Stocks Materials and Industrials, likely to benefit from
the upcoming cyclical upturn.
OW - Consumer Discretionary is the biggest
component, where China's gradual re-open
OW GARP over
Growth N N OW and expectations for peaking US terminal N N N
Expensive Growth
policy rate may lend support. Growth's higher
beta tends to outperform in cyclical upturns.
N - Consumer Staples is the biggeset

component. China's re-open will likely lead to
OW QARP over
Quality N OW UW better risk reward among Growth and Cyclical OW OW UW
Expensive Quality
Value names as Quality and Low Lov tend to
turn crowded before growth upturns.
OW Small SMIDs: Industrials and IT are the

top sectors. In 2023, they may benefit from
Size (Small vs
N N N N local capex upgrades, but to be partly offset N N OW
Large)
by weaker global demand via the ex port
channel.
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(1-212) 622-3601 01 December 2022
Regional Sector / Industry Views

Figure 10: JPM Regional Sector / Industry Views
Sct/Ind Views US Europe Japan EM China Asia ex-JP SE Asia LatAm
Analyst Lakos Matejka Nishihara Martins Liu Liu Batra Shayo
Energy OW OW N OW OW N N N
OW
Materials N (OW - Mining, N N OW N UW OW
UW - Chemicals)
Industrials UW UW N N OW N N UW
UW UW
- Capital Goods N OW
(OW - Aero&Def) (OW - Aero&Def)
- Comm/Prof Srv N N
- Transportation N N N
Consumer
UW N UW OW OW OW N OW
Discretionary
- Automobiles &
N UW N
Components
- Consumer
N N OW
Durables & Apparel
- Consumer
N OW OW
Services
- Retailing N N OW
Consumer Staples N UW OW UW N N OW N
- Food & Staples
UW OW UW
Retailing
- Food, Beverage &
UW N N
Tobacco
- Household &
UW N N
Personal Products
Health Care OW N OW UW UW UW OW N
- HC Equipment &
N OW N
Services
- Pharma / Biotech,
N OW UW
Life Sciences
Financials N N OW OW UW UW N OW
- Banks N OW UW
- Diversified
N UW OW
Financials
- Insurance OW OW N
Information
N N N OW N OW UW UW
Technology
- Software &
N OW N
Services
- Technology
Hardware & N OW N
Equipment
- Semiconductors &
N N N
S. Equipment
Communication
N OW N N OW OW N N
Services
-
Telecommunication OW OW OW
Services
- Media &
N UW OW
Entertainment
Utilities OW OW OW UW N UW OW UW
Real Estate UW UW UW N UW UW UW OW
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Key Equity Themes for 2023

For the year 2023, we are highlighting the following themes:
Global Thematic Baskets

Figure 11: JPM Global Thematic Baskets
Basket Name BBG Ticker Description Page
Companies expected to benefit by generating more revenue or material savings as the
Chinese economy eases Covid restrictions such as consumer goods, services, and / or cost
savings from reopening. It also includes: (a) Consumer Reopening plays - Companies
China Reopening exposed to Chinese travelers / China consumer – Companies that have lost out on revenue
JPGLCHRO opportunities due to stricter lockdowns in China, and expect revenue/margin trends to
38
Beneficiaries
improve as China reopens. (b) Chinese fiscal spending plays - As China reopens, we expect
more supportive fiscal backdrop. We are looking for companies that could benefit from such a
scenario.
Companies expected to benefit as countries reprioritize domestic/localized or diversified
manufacturing (e.g. domestic industrials / materials, etc). Suppliers are likely to benefit from
Nearshoring
JPGNEARS increased demand for setting up factories (commodities etc.). We see ASEAN, India, Mexico 41
Beneficiaries (LATAM) as likely beneficiaries. Some European companies could also look at production in
eastern part of Europe (Poland etc.).
Companies expected to lose from deglobalization, e.g. companies losing access to lowest
cost producers such as importers / consumer goods; multinationals could see more market
Deglobalization access restrictions e.g. Tech Hardware (Semis, Phones), Industrials (Autos, Capital Goods),
JPGDGLOB Healthcare. Companies that have high production reliance on China and are likely facing
43
Underperformers
large capex to move out of China or potential supply risks from rising China related geo-
political development.
Food Security Companies that are resilient to disruption from agricultural product/input end market and
JPGFOODS changes to fertilizer access, benefit from fiscal investments made in Agri space.
44
Providers
We also constructed additional regional baskets for these global themes:
Global Theme BBG Ticker Regional Implementation Page

JPUSCHRO US Stocks that are likely Beneficiaries of China Reopening 38
China Reopening Beneficiaries JPDUCHRO DM ex-US Stocks that are likely Beneficiaries of China Reopening 39
JPEMCHRO Emerging Markets Stocks that are likely Beneficiaries of China Reopening 40
Nearshoring Beneficiaries JPUNEARS US Stocks that are likely Beneficiaries of Nearshoring 41
Deglobalization Underperformers JPUDGLOB US Stocks that are likely at Disadvantage from Deglobalization 43
Source: J.P. Morgan Equity Macro Research. J.P. Morgan Research does not provide research coverage of these baskets and investors should not expect continuous analysis
or additional reports relating to them.
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Regional Thematic Baskets

Figure 12: JPM Regional Thematic Baskets – Developed Markets
Region Basket Name Ticker Description Details
This basket is expected to outperform the broader market when Inflation
US Inflation
US JPAMINOP fears or expectations are rising. The basket has a higher exposure to Link
Outperformers
cyclical sectors and has high correlation to Value stocks.
This basket is expected to underperform the broader market if inflation
US Inflation continues to rise and outperform the market if inflation surprises on the
US JPAMINUP Link
Underperformers downside. This basket has an inverse correlation and beta to inflation with
higher exposure to Low Volatility and Quality stocks.
This basket is expected to outperform the broader market if inflation
Europe Inflation surprises on the upside. The basket comprises of stocks with most positive
Europe JPDEINFW Link
Winners correlation to inflation, calculated as an average of yield curve, US and EUR
breakeven and commodity index.
This basket is expected to underperform the broader market if inflation
Europe Inflation surprises on the upside. The basket comprises of stocks with most positive
Europe JPDEINFL Link
Losers correlation to inflation, calculated as an average of yield curve, US and EUR
breakeven and commodity index.
Europe Europe Value JPDEVALU The basket comprises of stocks with the lowest price to book value. Link
The basket comprises of stocks with the highest price to book value and can
Europe Europe Growth JPDEGROW Link
perform well if bond yields are peaking.
This basket is expected to outperform when inflation and the BOJ policy
Outperformers
Japan JPJPBOJP change (YCC ) expectations are rising. The basket has a higher exposure to Link
with a BOJ Pivot
cyclical sectors and to value stocks.
Boarder The list of stocks is expected to outperform by reopening, even before China
Japan JPJPBROP Link
Reopening Plays reopens. The lists include retails and transportation sectors.
Figure 13: JPM Regional Thematic Baskets – SMid Cap Space

Region Basket Name BBG Ticker Description Details
Avoid exposure to employee intensive businesses given salary inflation is
Exposed to
Europe JPSMIPWE on the rise... short our “Inverted Pyramids” basket made up of the top decile Link
Rising Wages
of SMid-Caps by Salary Expense to Revenues.
Avoid exposure to employee intensive businesses given salary inflation is
Exposed to
US JPSMIPUS on the rise... short our “Inverted Pyramids” basket made up of the top decile Link
Rising Wages
of SMid-Caps by Salary Expense to Revenues.
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Figure 14: JPM Regional Thematic Baskets – Emerging Markets

Region Basket Name Ticker Description Details
China's This basket includes financials and real estate sector players that are best
China Financials JPCHFNSV positioned to survive the ongoing property asset deflation and likely supply side Link
Survivors reforms for financials.
China's
This basket includes domestic manufacturers with solid competency and can
China Domestic JPCHDMIN Link
benefit from industrial upgrades that are ongoing in mainland China.
Industrials
China's This basket may outperform the broader market should China's infra capex
China Infrastructure JPCHINFR strength continue, including new infra such as digitalization, renewables and Link
Plays healthcare, as well as the basic infra space.
China's This basket may outperform the broader market on consumption recovery in
China Consumption JPCHCSMP 2023 and sustained growth longer term. The central government's development Link
Plays targets imply real disposable income growth of 4.6% per year over 2020-2035.
EM stocks that have delivered consistent increases in their dividends per share
(DPS). The dividend nobles list comprises stocks with a consistent increase in
EM Dividend
EM JPEFDIVA their DPS over the past 5 years. We did allow one DPS cut during the period, but Link
Nobles
only if the DPS today is higher than 75% of the maximum DPS over the last four
periods.
EM saw a strong growth (62% yoy) in buyback activity in 2021. Among the top
EM Buyback 300 stocks by market cap in the MSCI EM index, we filter for the stocks that have
EM JPEFBYBK Link
List an average buyback yield >0.4% (MSCI EM average) over 2002-21, a positive
average buyback yield in the last five years, and are not UW.
Stock basket based on two characteristics to identify good equity investments: (1)
Quality: screened in this report via Return on Equity (ROE) minus Cost of Equity
EM Value (COE); and (2) Value: we identify undervalued EM Value Creators using a
EM JPEFVACR Link
Creators regression between ROE minus COE and P/BV. We anticipate volatility ahead in
equity markets given geopolitical tensions and rising US rates. As such, it is
prudent to look for sustained track record for profitability in the quest for alpha.
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Regional Equity Outlooks

US Equity Strategy
2022 was a year of macro and geopolitical shocks with sharply higher global rates and USD, Dubravko Lakos AC
stubbornly high inflation, China headwinds, and the largest conflict in Europe since WWII. (Global/US)
Investors responded to these events by derating S&P 500 P/E as much as 7x while some
speculative growth segments have crashed 70-80% from highs. Although fundamentals have Bhupinder Singh
been resilient throughout these shocks, we do not expect this year’s constructive growth bhupinder.singh@jpmorgan.com
backdrop to persist in 2023. Fundamentals will likely deteriorate as financial conditions continue
Narendra Singh
to tighten and monetary policy turns even more restrictive (Fed raises rates by another 75-100bp narendra.x.singh@jpmorgan.com
with an additional ~$1T in QT), while the economy enters a mild recession with the labor market
contracting and unemployment rate rising to ~5% (US Economic Outlook). JPM economics Arun Jain
projects inflation of ~5.0% by Mar’23 with Fed Funds target rate at 5.0% — effectively, it arun.p.jain@jpmorgan.com
amounts to 5.9% increase in real rate in this cycle or the highest real hike in over 40 years, an Kamal Tamboli
extremely restrictive change in policy in one year by any account (Table 1). Further, consumers kamal.r.tamboli@jpmorgan.com
have mostly exhausted post-Covid excess savings (Figure 15) and for the first time are getting hit
by a broadening negative wealth effect from all assets simultaneously (e.g., housing, bonds,
equities, alternative/private investments, crypto). The proverbial snowball should continue to
gain momentum next year as consumers and corporates more meaningfully cut discretionary
spending and capital investments. Thus, we are reducing our below consensus S&P 500 EPS of
$225 to $205 (vs. IBES consensus of $231) on weaker demand and pricing power, further margin
compression, and lower buyback activity. Upside and downside to our base case will largely
depend on the depth and length of the recession and the speed of the Fed’s counter-response.
Nonetheless, we expect market volatility to remain elevated (VIX averaging ~25) with another
round of sharp declines in equities. More precisely, in 1H23 we expect S&P 500 to re-test this
year’s lows as the Fed overtightens into weaker fundamentals (Market Outlook). This sell-off
combined with disinflation, rising unemployment, and declining corporate sentiment should
be enough for the Fed to start signaling a pivot, subsequently driving an asset recovery, and
pushing S&P 500 to 4,200 by year-end 2023.Table 1Figure 13
Figure 15: Household “Excess” Savings Likely Gone by Mid-2023 Figure 16: Diffusion Index of Global Leading Indicators
Savings recent trend assumes a decline at the 2022 rate Expected slowdown close to previous troughs including recessions
Source: J.P. Morgan Equity Macro Research Source: J.P. Morgan Equity Macro Research
US Business Cycle. JPM US Business Cycle Indicator (QMI), which leads the cycle by 3 to 6
months, is in contraction (below average and falling) but is not at a level typically associated with
a recession (Figure 2). US QMI leads EPS year-on-year change by ~9 months and the decline so
far predicts further slowdown in EPS growth extending into next year. A further contraction in
QMI beyond the lows of mid-2019 by 1Q23, i.e. a significant slowdown from here, could easily
presage -10.0% EPS growth for 2023 which is in line with our earnings growth estimate for the
year. Of the subcomponents of QMI, the weakness is most acute in liquidity reflecting worsening
financial conditions (e.g., tighter credit standards, strengthening dollar, and declining free
12
(1-212) 622-3601 01 December 2022
liquidity). Sentiment is also quite poor, notwithstanding some improvement recently, though it
tends to be more volatile compared to other leading indicators. While economic growth has
negative momentum and is in contraction, its level so far is still better than past intra-cycle
slowdowns (e.g., in 2015) and significantly above recession territory. However, if inflation stays
elevated, real growth could be the last shoe to drop as the Fed continues to increase the cost of
capital to the point of tipping the cycle into a recession. For instance, the full-term structure of
yield is the most inverted since 1960s except for Dec’78 and Nov’80 yield curve inversions
making this episode quite distinct from Jun’19 (Figure 19). A recession prediction based on
diffusion of yield inversions along the curve is also flashing red (Figure 20). In sum, the Fed may
pivot to pause and perhaps easing faster than currently anticipated.
Figure 17: JPM US Business Cycle Indicator (QMI) Figure 18: US QMI leads EPS Growth by ~9 months
Leads the cycle by 3-6 months

Figure 19: Yield Curve most Inverted except Dec’78 and Nov’80 Figure 20: Case for Fed Pivot? Yield Spreads Flashing Red
2-year yield is subtracted to make the yield curves comparable over time Diffusion Index of Yield Spreads at all Maturities Combination
Source: J.P. Morgan Equity Macro Research Source: J.P. Morgan Equity Macro Research
Inflation — our Quantitative Inflation Index, based on a subset of ~75 drivers, supports the
case for softening inflation (see report). Inflation has been the key downside driver of equity
performance YTD as CPI has exceeded expectations in the last six quarters and often by a large
margin. The tide may finally be turning with inflation likely peaking this quarter. On the demand
side, tightening US financial conditions, decline in real wages, strengthening US dollar, softening
housing market, and knock-on restrictive CB policies across the world are disinflationary.
Moreover, supply forces are expected to reinforce the reversal in inflation trend with rising labor
participation, reallocation of resources to post-pandemic services recovery (e.g. travel, tourism,
13
(1-212) 622-3601 01 December 2022
experiences) and ongoing unclogging of global supply gridlocks (e.g. rising inventories, declining
order backlogs, easing shipping and trucking logistics, resumption of grain shipments from
Europe etc). However, no one knows how quickly and how low inflation might go down given
a host of potential exogenous shocks (e.g. energy supply disruptions, friction among major
powers, deglobalization and nearshoring, less cost-efficient restructuring of supply chains etc.)
This also makes the timing of the Fed’s transition from hiking rates to a pause and an eventual
pivot to lower rates uncertain. Typically, inflation does not reach Fed’s desired goal before
economic weakness forces the central bank to pivot (Figure 23). This cycle is not likely to be
different with JPM economics predicting the Fed to pause with core CPI inflation at ~5.0%.
Inflation Outperformers (JPAMINOP) and Inflation Underperformers (JPAMINUP) are thematic
portfolios designed for implementing a view on future inflation.
Figure 21: JPM Quant Inflation Indicator (QII) suggests lowering Figure 22: Services component of QII
Inflation

Figure 23: Fed stops hiking before inflation drops to the target level, inflation expectations matter more
Table 1: Increase in Real Short-Term Rate by Mar’23 Likely to be the Highest in over 40 years
Real Short-Term Rate = Fed Policy Rate – Core CPI Inflation.
Policy rate is target Fed Funds Rate from 1971 and NY Fed Discount Rate prior to 1971
# of Avg Real Rate (Policy Rate-Core Inf) at: Change in Real Rate
Hiking Last Hike  First Cut 
Cycles Hike Start Last Hike First Cut
First Hike First Hike
Rising Inflation (1965-81) 15 2.0 4.0 4.1 2.0 2.2
Falling Inflation (1983-1993) 7 3.8 4.5 4.6 0.7 0.8
Stable Inflation (1994-2020) 5 0.8 2.7 2.7 1.8 1.8
Mar'2022 Hike -5.9 0.0^ ?? 5.9^
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US Earnings Outlook — 4Q22 corporate guidance to push 2023 EPS growth to

contraction. Through 2022, fundamentals remained well anchored given resilient labor market
and Covid reopening. These fading tailwinds and tightening financial conditions should make
for a more challenging backdrop with EPS likely to contract by -9% based on our estimates.
Corporate sentiment and guidance should start 2023 on a negative tone as the Street
recalibrates estimates lower from current EPS growth expectation of +5%. We are revising
down our below consensus 2023 EPS by another $20 to $205 (consensus $231) on lagged
effects of restrictive monetary policy, evaporating consumer savings, and elevated geopolitical
risks. We are modeling low-single-digit revenue growth next year on lower demand while
pricing should be relatively more supportive than prior slowdowns given the inflationary
backdrop. However, in 2023 we expect further normalization in net income margin of ~100bp
after an expected ~50bp margin erosion in 2022 due to negative operating leverage, rising costs
(wages, interest expense), record high trade-weighted USD, inventory surplus risk, and higher
effective tax rate. Our 2023 EPS assumes $4-5 EPS headwind from IRA (see Inflation
Reduction Act). If the recession is earlier, deeper, and longer than the current JPM view (mild
recession starting in 4Q23), S&P 500 EPS could collapse to below $200 especially if the
contraction is accompanied by a deflationary spiral and private credit cycle.
 Low revenue growth and further profit margin normalization. We see revenue
headwinds due to lower demand and tougher comps (e.g. pull-ins for Tech demand in Asia
due to 2022 Covid shutdowns, high energy prices in 2022, declining fiscal stimulus, etc.),
potential inventory surplus in the goods space, and strong dollar weighing on new orders.
Historically, during contraction, margin compression is the largest driver of earnings decline
due to operating and financial leverage (median margin compression of ~100bps during prior
recessions). Revenue and capex typically remain positive through recessions given the
nominal nature of these metrics. Note, the GFC recession was amplified by the credit cycle
and therefore the margin decline was much more severe while revenue and capex also
contracted. Our S&P 500 2023 EPS of $205 is based on low-single-digit revenue growth (1-
2%), additional -100bp of net income margin compression to ~11.5% (back to pre-covid
level), and ~25% decline in gross buybacks to $700b (-$250b assuming banks remain
restricted all next year). This expected -9% EPS decline for next year will still put it ~20%
higher than pre-Covid level largely due to organic / reflationary growth and the cumulative
impact of buybacks since 2019. If USD were to meaningfully reverse (+9% since pre-covid),
it would be a significant EPS driver in tune of +1% in additional earnings growth for every -
2% decline in the trade-weighted USD.
 Impact of higher interest expense. Zero rate policy was a significant driver of margin
expansion since GFC with S&P 500 (ex-financials) average rate falling from 6.2% in 2007 to
3.1% last quarter (including financials rate has fallen from 5.2% and 2.2%, respectively).
While spot rates have risen rapidly, the interest expense headwind should be manageable
given: (1) interest expense in aggregate is only ~1.5% of total revenues (ex-financials) and
most companies should be able to pass on higher interest cost to end users; (2) since the
weighted average maturity for S&P 500 companies is ~12 years and 92% of debt is fixed, the
rising interest expense should be gradual; and (3) $1.7 trillion in balance sheet cash (ex-
financials) should see relatively more immediate benefit through 2023. Presuming that the
~$366B of S&P 500 debt (ex-Financials) maturing in 2023 is refinanced at current rates (i.e.
assuming average HG yield of ~5.5%), we estimate that that, at a minimum, the
incrementally higher interest expense could shave ~$1.50 off EPS.
Lower Shareholder Return and Capital Expenditures. Corporate investment activity operates
with a significant lag to Fed policy. Higher rates combined with a more challenging earnings
backdrop should push corporates into capital preservation next year. While S&P 500 balance
sheet leverage and interest coverage are at healthy levels going into a slowdown next year, the
unprecedented rise in cost of debt (HG Yield is up ~250bp to 5.4% YTD; HY is up ~430bp to
9.0%) and ~150bp of net income margin compression from the peak should force investment
discipline across market segments. With earnings peaking and risk aversion rising (see earnings
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(1-212) 622-3601 01 December 2022
outlook and see 3Q Earnings Scorecard), we expect companies to recalibrate shareholder return
and reduce gross leverage, capital expenditure (ex-Energy) and working capital (e.g. durable
goods inventories). With this in mind, we are estimating total payouts for S&P 500 at ~$1.3T (-
~15% y/y) with buyback executions of ~$0.7T (-25% y/y) and dividends of $0.6T (flat y/y). This
implies a shareholder yield of ~4%, which in our view is less compelling when risk-free rate is
expected to reach ~5% ahead of a slowdown next year.
 Buyback activity has peaked and should continue to decline on lower profit margins,
elevated economic uncertainty, higher cost of debt, capital return restrictions on
Financials. For these reasons, we believe buyback 10YR CAGR should fall sharply to low-
single-digit rate compared to a more robust 8% CAGR seen since late 1990s. For next year,
we expect buybacks to decline by ~25% (-$250b to ~$700b). The two most significant
fundamental drivers for the reduced activity over the next year are lower profit margin and
higher cost of capital. Over the past year, net income margins have been normalizing from
post-Covid record margin of 13.3% (1Q22 LTM) while high grade yields have risen by
260bp to 5.4%. In fact, higher debt yields are already weighing on buybacks with debt
funded programs declining to only ~14% YTD vs. long-term trend rate ~21%. Though we
expect buyback executions to remain elevated for the remainder of 2022, the replenishment
rate / new buyback announcements should trail execution driving down buyback buffers
(announced buybacks yet to be executed balance of $834b). We have already seen a shift in
announcement activity with YTD announcements at $675b (vs. $715b same period last year).
This trend could intensify given earnings pressure for the most active buyers (i.e. Financials,
Tech/Communication) especially Banks given capital constraints over the short/medium
term.
 Dividends to remain stable but little urgency to raise them given lower prices. After
sharply lower market values, there is much less urgency to increase dividend payout with
dividend yield now at 1.7% compared to 1.3% earlier this year. The current dividend yield is
now in line with 3yr and 5yr averages of 1.6% and 1.7%, respectively. We expect aggregate
S&P 500 dividend income to remain stable on the back of annual increases from dividend
aristocrats, rising profitability of commodity sectors, and potential payout substituting from
buybacks to dividends post IRA legislation. While dividend futures imply a small cut next
year, we don’t subscribe to this view outside of a deep recession scenario, see Dividend
Futures. During the GFC, dividend income fell by ~22% while during Covid and dot.com
bust dividends were relatively untouched (down ~3% and down ~2%, respectively).
 Lower Capital Investments and Tighter Working Capital and Inventories. We expect
corporates to rein in capital expenditures across the board (excluding Energy related
industries). Companies in Growth sectors (Tech, Communication, Healthcare) will likely
remain in belt-tightening mode after years of rising investment activity (share of spending by
this cohort accounted for ~1/2 of total S&P 500 capex in recent years vs. ~1/3 over a longer
period). These companies invested in building out cloud computing infrastructure,
distribution centers and digital content. While we expect commodity related companies to
increase capex in coming years, we don’t expect these companies to offset the declines by
larger growth peers. Also, we expect corporates to more tightly manage working capital
investments / inventories given rising cost of capital and thawing supply chains. Compared
to pre-Covid, inventories have risen by ~30% for goods related industries and this excess
inventory could be a risk for margins next year.
Balance sheet health — S&P 500 balance sheets are not over levered and interest coverage
should remain healthy. We expect gross leverage (ex-financials) to decline for the first time since
the GFC given sharply higher rates and tighter capital markets. The spread between earnings
yield and HG yield has converged (vs +220bp over the last decade and as high as ~400bp over
the last 10yrs), which should reduce incentive for corporates to fund buybacks using debt. We
expect S&P 500 companies in aggregate to utilize elevated cash balance of $1.7T (ex-Financials)
and annual cash flow $1.7-1.8T to reduce debt at time of maturity. With ~7% of S&P 500 debt
(ex-Fins) expected to mature and roll over next year and profit margins to compress further, we
expect some pressure on interest coverage from near best levels. However, we do not share the
16
(1-212) 622-3601 01 December 2022
same level of enthusiasm for smaller companies (public and private), which have much higher
operating leverage, lower profit margins (5% for S&P 600 vs. ~12% for S&P 500), greater
sensitivity to tightening financial conditions that should make it more difficult to raise capital to
fund growth and / or roll debt.
Gross leverage and cash balance. Despite record low rates for more than a decade, large-caps
did not gorge on cheap debt from a debt service standpoint. In fact, net debt to asset is at or below
prior cycle peaks while interest coverage is near best levels. Higher capital requirements for
Banks post-GFC and low return on capital has forced steady deleveraging across regulated
Financials. Further, majority of the incremental debt since the GFC was largely due to capital
structure optimization strategies as growth companies matured into highly profitable mega-caps
with sustainable revenues, record margins, and sharply higher market capitalization (e.g., Tech,
Consumer Tech, Communication, Healthcare). While some might argue that gross debt has risen
~150% over the last twenty years (ex-Financials), it was a prudent capital decision in our view
since interest expense over the same period increased by only ~55% while profitability rose by
~400, market value by ~300%, and interest coverage is near best level. Unlike 1980-2000, the
current debt cycle was more organic and not driven by debt demand from conglomerates (M&A)
or banks (credit creation). In our view, the highly restrictive central bank policy will hurt smaller
and cyclical companies the most with lower quality earnings stream and lower profit margins
(many cases negative). Assuming these companies (public and private) will be able to access
capital markets next year, the cost will be much higher than for their larger peers (HY vs HG
spread widened to 350bp in September).
Figure 24: JPM S&P 500 EPS Target vs. Consensus Figure 25: S&P 500 NTM P/E Multiple Still Elevated vs. History
Earnings Per Share NTM Price to Earnings
$290 26x
24x
$270 Consensus 2024 2024 EPS: 15.6x
$253.37 22x 2023 EPS: 17.1x
$250
20x
$230 Consensus 2023,
18x Median NTM P/E:
$231.25
16x 17.4x
$210 16x
JPM 2023 Est.
$190 $205.00 14x
12x
$170 Consensus 2022
$220.33 10x
NTM P/E
$150
Dec'19 Jun'20 Dec'20 Jun'21 Dec'21 Jun'22 Dec'22 Jun'23 Dec'23 8x
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22
Source: J.P. Morgan Equity Macro Research, Factset, I/B/E/S Source: J.P. Morgan Equity Macro Research, Factset, I/B/E/S
17
(1-212) 622-3601 01 December 2022
Cross-Regional / Europe Strategy Mislav Matejka, CFA AC

Recession is our base case for Europe and the US, where we expect 10% earnings contraction in mislav.matejka@jpmorgan.com
2023. On the positive side, we argued of late that bond yields are likely peaking and inflation is Prabhav Bhadani, CFA
turning lower, which should act as a support for P/E multiples. Consensus earnings growth prabhav.bhadani@jpmorgan.com
projections for next year, which are still calling for upside, are likely to be cut, but not as much
as typical, where in the past recessions the fall was of the order of 20-40%. Better topline Nitya Saldanha, CFA
nitya.saldanha@jpmchase.com
growth, stronger pricing power and FX tailwind help International markets. As we move
through 2023, we are likely to see an inflection point higher in PMIs and in earnings revisions, J.P. Morgan Securities plc
perhaps towards the end of 1H. This should ensure that equities finish the year at much
higher levels than what they might witness in the interim, in the phase where markets will Karishma Manpuria, CFA
karishma.manpuria@jpmchase.com
reflect the headwinds of the rebasing of earnings and of activity. Net-net, we look for European
Equity Index levels at end of next year somewhat higher than current. Anamil Kochar, CFA
anamil.kochar@jpmchase.com
Figure 1: Our lead indicator calls for further activity Figure 2: We do not expect continued decoupling J.P. Morgan India Private Limited
weakness in 1H, but an inflection point thereafter is between inflation&bond yields on the one side, and
likely activity on other. Bond yields are likely peaking, which
62 15 would help P/E multiples
63
5.1%
57 10
61 4.6%
52
5 59 4.1%
47 3.6%
57
0
3.1%
42 55
-5 2.6%
37 53
2.1%
32 -10 51
1.6%
49
27 -15 1.1%
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 47 0.6%
Recession Eurozone Composite PMI M1, deflated using HICP, %y/y (brought forward by 9m) 10 11 12 13 14 15 16 17 18 19 20 21 22
US Manufacturing PMI US 10Y bond yield (rhs)

Source: Datastream
Source: Datastream
At a regional level, we believe the convergence between the US and International markets
will continue, in 2023 likely in USD terms as well, and not just in local currency as was the case
this year. S&P 500 risk-reward remains relatively unattractive, given above average P/E multiple
with the most hawkish central bank out of DM, and FX is a headwind. Out of International
markets, UK is our top pick for this year, and we keep our OW on FTSE100 in DM, and a pair
trade of OW FTSE100 vs UW FTSE250. UK trades at a record discount vs other regions and it
offers the highest dividend yield globally. Continental equities have a recession to negotiate and
some clear geopolitical tail risks, but Eurozone has never been this attractively priced vs the US.
Japan also appears attractive given cheap valuations, smaller inflation risk vs other markets, it is a
reopening play, beneficiary of weak JPY and an upcoming end to YCC could be seen as a
positive.
Figure 3: MSCI Eurozone sector neutral P/E vs MSCI US Figure 4: US relative to Eurozone - EPS and Performance
is at record low – the multiyear uptrend is likely peaking out
1.00 240
260 230
220
0.95 240
210
220 200
0.90 190
200 180
0.85 170
180
160
0.80 160 150

140
140
130
0.75
120
120
110
0.70 100 100
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 10 11 12 13 14 15 16 17 18 19 20 21 22
Recessions Eurozone Sector Neutral P/E relative to US Median +1 Stdev -1 Stdev MSCI US relative to the Eurozone (LC) MSCI US 12m Fwd EPS relative to Eurozone (LC, rhs)
Source: Datastream Source: Datastream

EM generally remains hostage to China, whose medium term outlook is challenging on many
fronts, given structural growth downtrend and decoupling drive. However, tactically the
reopening trade is coming and the activity hurdle rate is very easy, with further policy support
likely. Beyond a tactical reopening bounce, we do not see the case for sustained EM
outperformance versus DM next year, and are neutral.
18
(1-212) 622-3601 01 December 2022
Figure 5: MSCI UK 12m Fwd. P/E relative to MSCI World – Figure 6: China property starts hurdle rate is extremely
remains very attractive, despite outperformance this low
year 40
1.00 30
0.95 20
0.90 10
0.85
0
0.80
-10
0.75
-20
0.70
-30
0.65
-40
0.60
-50
0.55
95 98 01 04 07 10 13 16 19 22 11 12 13 14 15 16 17 18 19 20 21 22
MSCI UK 12m Fwd P/E relative to MSCI World Median +2 Stdev -2 Stdev
China floor space started, %y/y, 3mma
Source: IBES Source: Datastream

Figure 7: Topix relative and Yen Figure 8: Foreign investors accumulated net spot
50% 50% purchases and TOPIX EPS relative
40% 40% 110 4
2
105
30% 30% 0
100 -2
20% 20%
95 -4
10% 10% -6
90
-8
0% 0%
85 -10
-10% -10% -12
80
-14
-20% -20% 75
-16
-30% -30% 70 -18
11 12 13 14 15 16 17 18 19 20 21 22 16 17 18 19 20 21 22
TOPIX vs MSCI AC World 12m forward EPS
Topix (LC) relative to MSCI World ($), %yoy USD / JPY, %yoy (rhs) Foreign investors accumulated net purchases (spot, tn JPY, rhs)
Source: Bloomberg Finance L.P. Source: Japan Exchange Group (JPX), IBES
At a sector/style level, we remain unexcited by general Cyclicals, and look for a potential turn in
their fortunes closer to the inflection point in PMIs, and once earnings base becomes more
realistic. Within Defensives we believe Healthcare and Telecoms appear interesting. European
Healthcare has not performed overly well in 2022, and could be a good place to be in while the
activity & earnings are resetting. We were very bearish on Tech this year, but if the bond yields
are peaking, as we suspect, then Tech sector could start finding a floor. While Tech might not be
a clear short anymore, medium term we believe there is more to go in the relative convergence
between Growth and Value styles. We entered the year long commodity equities. Despite the
strong run, we see further outperformance in Miners as possible given cheap valuations,
potentially peaking USD and some China reopening.
Figure 9: Cyclicals are at peak earnings, but have Figure 10: Mining valuations remain attractive despite
already derated substantially, to past recession lows, 25% relative run this year
and should be an opportunity as we move through the 1.8
year 1.6
1.3
1.4
1.2
1.1 1.2
1.0
1.0
0.9
0.8
0.8
0.7
0.6
0.6
0.4
0.5
95 97 99 01 03 05 07 09 11 13 15 17 19 21 95 97 99 01 03 05 07 09 11 13 15 17 19 21
Recessions/Shocks Europe Cyclicals ex Tech including Banks and Energy 12m Fwd P/E rel to Defensives Median +/- 1stdev MSCI Europe Mining 12m Fwd P/E relative Median +1 Stdev -1 Stdev
Source: IBES Source: Datastream
19
(1-212) 622-3601 01 December 2022
Japan Strategy Rie Nishihara AC (Japan)

rie.nishihara@jpmorgan.com
Resilient performance ahead of a recession, due to solid corporate earnings
We expect the Japanese equity market to pull back further, along with other major markets, in the JPMorgan Securities Japan Co., Ltd
early part of 2023, owing to recession risks, but then rebound fully. Our year-end forecasts are
2,100 for TOPIX and 30,000 for the Nikkei 225. We expect the first and second halves of the cycle
to be different in 2023, and we have a constructive view on Japan equities especially in the first
half of the cycle. In early 2023, when global equity markets face downward pressure, we expect
Japanese equities to show resilience (our forecasts are 1,800 for TOPIX and 26,000 for the Nikkei
225) thanks to Japanese companies’ solid fundamentals mainly due to (1) the economy’s
reopening, (2) the residual benefits of the weak JPY for earnings (EPS +6-7ppt), and (3) low
valuations.
Regarding the economy’s reopening, the Japanese government’s border reopening in October 2022
is likely to lead to an increase in inbound demand from a growing number of foreign visitors to
Japan. We expect the inbound demand to overshoot. JPY weakness will probably continue to
benefit corporate earnings until mid-2023, reflecting a nine-month time lag. A Fed policy shift and
BOJ changes to its yield curve control (YCC) policy are likely to lead to upward pressure on JPY
in 2023. However, since we do not expect JPY to appreciate sharply against USD as our main
scenario, slight JPY appreciation and lingering benefits of JPY weakness in the prior year are
likely to offset each other and not substantially hold back Japanese corporate earnings, especially
in the first half of the cycle (average USD/JPY: ¥138 for 2022, ¥137 for 2023).
BOJ policy change, a focus in 2023

The BOJ is likely to change its YCC policy in March 2023 (J.P. Morgan estimate). If market
participants expect long-term yields to rise slightly and not repeatedly, Japanese stocks would
likely react positively to another confirmation of an end to deflation, as was the case the last two
times the BOJ changed its YCC policy (in July 2018 and March 2021). However, if the market
expects yields to rise sharply and the BOJ to raise rates several times, the BOJ’s ability to control
the yield curve and the impact on the financial system would be concerns and likely lead to a
negative reaction in the stock market. The rise in long-term gilt yields during the previous Truss
administration may have raised the hurdle for BOJ changes to its YCC policy, and the timing of a
US recession, a stock market pullback, and the BOJ Governor change could be noteworthy. A
25bp rise in the JGB 10Y yield would bring JPY appreciation of ¥5 against USD, which would
reduce TOPIX EPS by 3.6% and TOPIX by 4%.
Moderate rise during rebound phase post bottom in a recession

In a rebound phase following the start of a mild US recession in the second half of this cycle, we
would expect Japan’s real GDP growth to slow (from 1.6% in 1H to 0.3% in 2H) and corporate
earnings growth to slow, too. Along with other major markets, Japan’s market is likely to rebound,
led by valuations.
Investment strategy
In the first half of the cycle, we recommend pharmaceuticals, biotech, business solutions, and other
defensive growth groups. In the second half, we recommend semiconductors, machinery,
technology, and other cyclical growth groups.
Risks and catalysts

Risks include a severe US recession, a delayed rebound in China’s real estate market and easing of
its zero-COVID policy, and high geopolitical tensions in Asia. Catalysts include relaxation of
China’s zero-COVID policy and a soft landing for the US economy.
20
(1-212) 622-3601 01 December 2022
Figure 2: Japan equity outlook for 2023 Figure 3: Japan FX and interest rates outlook
(pts)
Soft recession Soft landing Deep recession
2,150
23-Mar 23-Jun 23-Sep 23-Dec
2,100
FX (vs USD)
2,050 TOPIX: 2,100
TOPIX: 1,950 Japan USDJPY 140 138 135 133
NIkkei: 30,000
Nikkei: 28,000
2,000
Interest Rates(%)
1,950
US Fed funds 4.75-5.00 4.75-5.00 4.75-5.00 4.75-5.00
1,900
2Y 4.50 4.30 4.10 3.80
1,850
10Y 4.00 3.90 3.70 3.40
1,800
Japan Policy rate -0.10 -0.10 -0.10 -0.10
1,750 TOPIX:
1,800… 2Y 0.00 0.00 0.00 0.00
1,700
10y 0.45 0.40 0.40 0.45
1,650
Dec-22E Bottom Dec-23E
Source: J.P. Morgan estimates Source: J.P. Morgan Global FX Strategy 2023, Global Fixed Income Markets 2023 Outlook
Figure 4: Number of foreign visitors to Japan Figure 5: Japan/US yield gap (dividend yield – 10y govt bond yield)
(10 thousand) 2019 2020 2021 2022 (%) TOPIX Yield Gap S&P500 Yield Gap
350 4
3 High Equity
300
Dividend Yield
2
250
1
200
0
150 80% -1
100 -2
50 -3
-4
0 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: Bloomberg Finance L.P., J.P. Morgan
Figure 6: USDJPY impact on TOPIX and EPS Figure 7: Japan equity sector allocation in the cycle of 2023
1H 2H 2023
Energy N N N
Materials N N N
Industrials N OW N
Discretionary UW OW UW
Staples OW UW OW
Healthcare OW N OW
Financials OW N OW
T echnology N OW N
Comm Service N N N
Utilities OW UW OW
Real Estate UW N UW
Note: change% shows the change from estimates (140 USDJPY) as of Oct 2022 (JPM Source: J.P. Morgan estimates
calculation)
21
(1-212) 622-3601 01 December 2022
Emerging Markets Strategy Pedro Martins Junior, CFA AC

(Emerging Markets)
We forecast EM equities to return 14% next year (MSCI EM 1,060), driven primarily by pedro.x.martins@jpmorgan.com
2024 earnings growth or convergence of valuation to the historical discount to DM equities:
(1) the consensus EPS growth ranges are USD+1 to +2% for 2023 and USD+10 to 13% for 2024; Banco J.P. Morgan S.A.
and (2) we assume MSCI EM forward P/E of 11.4x, close to EM historical average. Jainik Mody, CFA
jainik.mody@jpmorgan.com
 Bear and bull risks in the 2023 base case are plenty. We provide sensitivity analysis on
J.P. Morgan Securities plc
how EM markets / sectors performed historically versus economic growth cycles (proxied
by PMI), USD cycles (strong / weak), their betas to MSCI EM, and if valuation offers a Anindita Gandhi
boost (excessive risk premium) or is a risk factor (de-rating risk). anindita.gandhi@jpmorgan.com
 Explore three asymmetries into 2023: (1) China to be the only big economy accelerating Madhav Maheshwari
madhav.maheshwari@jpmorgan.com
growth into 2023, boosting EM GDP growth velocity relative to DM; (2) Optionality from
USD and US interest rate peaking. EM equities historical median advance is 3.4% for each J.P. Morgan India Private Limited
1% weaker broad USD index; and (3) Under-allocation coupled with under-valuation of EM
equities can sustain returns relative to DM.
 Navigate thematic stock baskets for themes such as near-shoring, food security, USD
weak / strong, top EM ESG stocks and geographical exposure to China (accelerating
growth), Europe (front-loaded recession) and the US (back-loaded recession risk).
We use our risk budget to: (1) reinforce non-consensus calls to OW China / UW India; (2) OW
commodity suppliers via Brazil / Saudi Arabia; (3) U/G South Korea and Inf. Technology and
D/G Chile and Materials.
 OW China: Client feedback on China continues to be cautious for the long run given
uncertainty in calculating equity risk premium due to regulatory and geopolitical tensions.
We tactically OW China on valuation, growth acceleration and positioning.
 UW India: (1) hedge for earnings disappointment driven by waning growth on weaker FX,
elevated commodity prices, and inflation; and (2) de-rating risk exacerbated by the domestic
monetary tightening cycle and index composition.
 OW commodity suppliers: (1) OW Brazil: commodity exposure, fading political
uncertainty, optionality from end of monetary tightening, and undemanding valuations and
(2) OW Saudi: benefits of elevated oil prices trickling down to domestic economy;
normalized valuations hedge from USD-pegged currency.
 Info Technology to OW: expected peaking of US rates and forecasted bottom in tech sub-
sectors especially memory, as the downcycle is advanced and we expect memory price
decline to slow towards 1H23, and China-focused Asian tech stocks given emerging signs of
restocking; and (2) South Korea to OW: upside catalysts to Auto, EV, and Solar industries
and opportunity in the memory space.
 Materials / Chile to Neutral from OW: Weaker global growth demand outlook in 2023;
China growth recovery to be less capex heavy and more consumer driven. On Chile: profit
taking on YTD strong performance, lower copper price forecast into 2023.
22
(1-212) 622-3601 01 December 2022
J.P. Morgan EM Equity Strategy – Factors Driving Our Medium-Term Views

Driver Im pact Our Core Working Assumptions Recent Developments
Global Growth Negativ e Below -trend 2023 grow th Meaningful negativ e rev isions driv en by geopolitical uncertainties and higher rates
EM Growth Mix ed Accelerating grow th relativ e to the US China dy namic zero cov id policy ev olv ing
Inflation Mix ed EM inflation peaking in 4Q22 Dow nw ard pressure w ith low er commodity prices / Yet tight DM labour markets
Monetary Policy Positiv e Haw kish ex pectation might be peaking EM Central Banks tightening coming to a close
Currency Mix ed Broad USD peaking 1Q23 Broad USD index positiv e YTD
Earnings Negativ e 2023 low single-digit EPS – below trend Strong negativ e earnings rev isions YTD
Valuation Positiv e P/E and P/BV attractiv e v s long-term av g. Both P/E and P/BV are at discount to DM
Positioning Mix ed Global mutual funds UW EM equities Strong YTD flow s into EM equities peaked in May – strong outflow s since then
J.P. Morgan EM Equity S trategy – 2023 Year-End Index Targets (MSCI EM)
Scenario Target Upside Com ments
Bull  EPS integer is $86 for 2023 and $97 for 2024
1,190 28%
Case  Forw ard P/E of 12.2x , taking account of P/E and P/BV gaps to historical av erages on both absolute and relativ e to the US
Base  EPS integer is $82 for 2023 and $93 for 2024
1,060 14%
Case  Forw ard P/E of 11.4x , in line w ith historical v aluation
Bear  EPS integer is $74 for 2023 and $83 for 2024
830 -11%
Case  Forw ard P/E of 9.9x , or 1.0x SD low er from base case
Bull Case (MSCI EM 1,190) Bear Case (MSCI EM 830)

The bull case contemplates faster-than-ex pected peaking of US rates The bear case contemplates a deeper-than-ex pected global economic
and USD weakening, leading to an abbrev iated economic slowdown deceleration – possibly driven by an acute credit crunch – further USD
and lower equity risk premium. strengthening, and higher equity premium.
The Bull Case for EM Equities The Bear Case for EM Equities
Core Pillars Discussion Points Core Pillars Discussion Points
Abbreviated Shallow or no EPS recession into 2023 Resilient demand-driv en inflation / higher US rates
Economic Acceleration of EM relativ e grow th to DM Weaker Growth Credit crunch leading to hard recession
Slowdown High commodity prices for longer Populism risk: public tariffs and social protests
“Risk On” global asset allocation “Risk Off” global asset allocation
Weaker USD Under allocation to EM equities Stronger USD EM tw in-deficits under forensic scrutiny
EM monetary easing Risk of EM corporate debt ev ents
Ex panding equity v aluation multiples Depressed EM equity v aluation multiples for longer
Lower Equity Higher Equity
Consensus conserv ativ e on EPS estimates Global geopolitical risks escalating
Risk Prem ium Risk Prem ium
Beta and cy clicality US policy making: trade and sanctions
23
(1-212) 622-3601 01 December 2022
China Strategy Wendy Liu AC (Asia/China)

wendy.m.liu@jpmorgan.com
YTD in 2022, China equities have turned into a volatile top-down trading market on multiple
structural concerns. Following around YTD 30% decline in USD terms, we forecast in our base- J.P. Morgan Securities (Asia Pacific) Limited/
case scenario for 2023, 17% upside on MXCN from now to end 2023, on 14% consensus FTM J.P. Morgan Broking (Hong Kong) Limited
EPS growth y-y at end-2023 and target P/E at 10.5x vs FTM P/E of 10.1x currently. This would
take the index back to where it was at end-July 2022. From now to April 2023, we anticipate
periods of rising, peaking and falling Omicron cases, with infection trajectories on key cities and
over major national holidays attracting the most market attention. This gradual cyclical upturn
will be accompanied by slowly improving business and consumer confidence. JPM estimates
that China’s 2.9% GDP growth y-y in 2022 will rise to 4% y-y in 2023, with consumption
being the biggest marginal contributor, export the biggest marginal decliner, and property,
while still a drag, will be less so than it was in 2022. This cyclical upturn is a standout
globally in 2023 and is a transition to a likely synchronized global recovery sometime in
2024. Beyond the re-open cyclicality, most investor questions center around how to price
structural risks in terms of a reasonable set of P/E multiples. For many, current valuations
are undemanding if geopolitical risks substantially reduce.
Bull case at 12x FTM P/E on consensus estimate

At 12x FTM, this would take the index back to its late February 2022 level and would require the
following in our view: 1) improving albeit still competitive US-China relationship with a
substantial reduction in cross strait risks, 2) China’s managed property deflation soft lands after
making a trough in secondary home prices, and 3) definitive evidence of government support for
the private sector. Following a relatively constructive G-20, investors will be tracking 1) the
upcoming PCAOB assessment, 2) Blinken’s visit to China, and 3) the Taiwan Policy Act. We
expect China’s physical property market to stabilize in 2024 and secondary home prices to
trough by late 2023. Over-valuation of China’s residential property is moderate compared to
Japan’s housing bubble as China’s urban home value to GDP stayed at =>2x GDP for six years
before peaking at 2.5x in 2020, vs Japan staying at =>2x for 20-years before peaking at 3x in
1992 (China's property asset deflation). 2023 would be the third consecutive year of decline in
China’s home value to GDP ratio. Given onshore households have saved up Rmb30trn since the
pandemic (vs Rmb39trn in mortgage loans, Rmb116trn in household savings and around
Rmb260trn in estimated gross urban home value), we think some of such savings will become
upgrade demand for housing over 2023-2024.
Bear case at 8x FTM P/E on consensus estimate

A 8x P/E on MXCN or lower historically corresponded with the European debt crisis in 2011
and FX/equity bear markets over 2H2015 to 1H2016. Weak global demand, a resilient USD and
pockets of credit events would raise macro level concerns sometime in 2023. JPM’s global macro
team forecasts a mild recession in late 2023, an extra 100bps of Fed rate hikes into 1Q23 and the
start of Fed easing only in 1H24. The JPM global FX strategy team believes broad-based USD
sell-off may not last with macro uncertainty near 5-decade high and USD yielding more than half
of global FX. JPM estimates that CNY is likely to be range bound vs USD in most of 2023 and
may regain modest strength from late 2023 to 2024. For credit risks, JPM Asia Credit team notes
that while China has turned more supportive, sector-wide access to liquidity has yet to occur.
Sector & style recommendation

In anticipating of the mild cyclical upturn, we OW Energy, Consumer Discretionary and
Communication Services, we also OW Value in Industrials and Materials. We UW Value
among financials (Financials, Real Estate) as during much of 2023, the property sector will
continue to be a drag, raising concerns over the financial sector’s asset quality. We UW
Healthcare. We note several probable triggers for risk aversion: heavy travel over CNY,
secondary home price cuts, credits risks, and twin deficit or macro resilience concern in Asia
during 2023.
24
(1-212) 622-3601 01 December 2022
Figure 26: MSCI-China sector FTM P/E Figure 27: Net OW-UW by EM funds on China & HK vs. MSCI EM
Avg -1SD +1SD 20
60x
+2SD +3SD Latest 10
50x 12/31/2021 0
40x -1
-10
30x -20
20x -30
Jan-14
Sep-14
May-15
Jan-16
Sep-16
May-17
Jan-18
Sep-18
May-19
Jan-20
Sep-20
May-21
Jan-22
Sep-22
10x
0x
Source: EPFR Global, MSCI, J.P. Morgan calculations. The calculation of OW is greater than 2%
overweight versus the MSCI benchmark. UW is less than -2% of benchmark weighting. <0.1% =
zero weighting or bearish view.
Source: MSCI, Refinitiv Eikon, J.P. Morgan estimates

Figure 28: Decomposing onshore China’s Rm514trn in net Figure 29: Real estate’s share of GDP has been correcting for 3 years
household assets 16%
Rmb trn 14%
12%
600 10%
8%
400 237 231 6%
107 4%
200 6 114
39 2%
0 17 0%
1952
1957
1962
1967
1972
1977
1982
1987
1992
1997
2002
2007
2012
2017
2022
2027
2032
Consumer loans
mortgage - 30%
Mortgage
consumer loans in
consumer loans in
Home value -
30% operating loans
operating loans
*Home value -
Cash+deposits-
mortgage
Value at risk -
proportion
proportion
Real estate's value-added

as % of GDP
Real estate & construction's value-added as % of GDP
Source: Wind, J.P. Morgan

Liability Net asset
Source: J.P. Morgan estimates. * we calculate home value - mortgage - 30% operating loans
as a directional approximation to take into account the amount of residential housing pledged
for such loans.
Figure 30: China quarterly GDP y-y Figure 31: China TSF and credit impulse
8% % JPM
6.7% 6.5% forecast
7% 40
5.9%
6% TSF growth
5.3% 30
4.8% 4.8%
5% 4.4%
3.9% 20
4% 3.6%
2.7% 2.5% 10
3%
2% 0
TSF growth minus nominal GDP growth
1% 0.4% -10
0% 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23
1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24
Source: J.P. Morgan Economics forecasts Source: PBOC, J.P. Morgan Economics forecasts
25
(1-212) 622-3601 01 December 2022
Figure 32: MSCI-China FTM P/E changes driven by macro events

20x
18.5x
Global recovery from
COVID-19 on track +
18x 10y UST
market expectation
on US-CN YTM
relationship to climbed +3SD
stabilize
16x 15.9x
Global liquidity
injection + Regulatory tightening on
China's early e.g. internet, education,
14.7x 15.1x +2SD
recovery from healthcare, properties +
Global and China COVID-19 China's credit impulse
14.7x
economic recovery downcycle
14x In Oct-11, the European Truce + improved and mild Fed rate hike
13.4x debt crisis reached an Shanghai
liquidity + paused
inflection point (there In early 2014, Fed regulatory normalization +1SD
Stabilizing
were repetitions in May- pledged to maintain 12.3x 12.6x tightening12.6x and fiscal
Chinese 12.6x
12, which led to market low rates; rising economy and a 12.1x packages
12x dives); China expectation on Major central
more-dovish- bank rate hikes, 11.9x
structurally loosen SOE reform and Rising concerns TSF
than-expected Russia-Ukraine
monetary policy to boost infrastructure Fed over faster-than- surge Avg since 2010
growth; economy spending. In Nov- expected Fed rate tension and
11.1x
Ongoing turnaround; US Fed 10.3x 14, PBOC cut hike; POE bond Shanghai Latest, 10.1x
European debt announced QE3 in Sep- interest rates. Weaker defaults, lockdown
10x crisis, weakening liquidity as 10.3x 10.0x
12 to stimulate growth. Baoshang Bank
market sentiment US Fed rate event US-CN trade COVID-19 global Moderating
9.5x 9.6x tension 9.5x Fed hike
and global hike in Dec outbreak -1SD
economic 2016 getting escalation and Renewed potentials,
slowdown raised 8.6x priced in stand-off + concerns over China
concerns; Inflation 8.4x 8.1x regulatory geopolitical moving
8x
rose in mainland Rmb tightening + tension, Covid & 8.2x towards
China and From 2013 to early 2014, market traded depreciation, A- weak liquidity hawkish Fed reopen, &
monetary policy sideways on a “taper tantrum" anti- share tumble and improving -2SD
tightened sharply. corruption in China and credit crunch in weak Dec 2015 US-China
6.9x onshore financial markets in June/Dec China macro data relations
6x
Jan 10
Apr 10
Jul 10
Oct 10
Jan 11
Apr 11
Jul 11
Oct 11
Jan 12
Apr 12
Jul 12
Oct 12
Jan 13
Apr 13
Jul 13
Oct 13
Jan 14
Apr 14
Jul 14
Oct 14
Jan 15
Apr 15
Jul 15
Oct 15
Jan 16
Apr 16
Jul 16
Oct 16
Jan 17
Apr 17
Jul 17
Oct 17
Jan 18
Apr 18
Jul 18
Oct 18
Jan 19
Apr 19
Jul 19
Oct 19
Jan 20
Apr 20
Jul 20
Oct 20
Jan 21
Apr 21
Jul 21
Oct 21
Jan 22
Apr 22
Jul 22
Oct 22
Source: MSCI, Refinitiv Eikon, J.P, Morgan
26
(1-212) 622-3601 01 December 2022
Asia Strategy Wendy Liu AC (Asia/China)

2023 is likely to be a year of adaptation for Asia. Our base case is that US and Europe will see
recession in 2023, which will lead to consensus earnings estimate cuts during 1Q2023 and weak Mixo Das AC
risk appetite around that time. But as Japan re-opened in October and China is trying to re-open, mixo.das@jpmorgan.com
Asia’s growth slowdown could be more moderate. By market, Korea and Taiwan are likely to
benefit from these two re-opens and this is where consensus 2023 EPS growth expectations are J.P. Morgan Securities (Asia Pacific) Limited/
J.P. Morgan Broking (Hong Kong) Limited
low to start with. Investors may use the volatility in 2023 to buy businesses with global or
regional excellence and be positioned for global growth revival in 2024. For South Asia, we
anticipate EPS downgrade pressure to build entering 2023 and twin deficit concerns to rise in
some cases. But supply chain relocation related FDIs into parts of South Asia is a strong secular
driver that will help set a floor to selected market-sectors in 2023.
In periods of 2023, we anticipate tighter global financial conditions and higher borrowing costs
may trigger pockets of credit risks. Global financial conditions are becoming more restrictive: the
Fed’s fund rate is poised to rise by another 75-100bps plus an additional US$1trn in QT. Early
2023’s weak risk appetite may trigger some risks and late 2023 may see risks also should tight
financial conditions continue. Compared with YTD’s divergent returns, South Asia equity
markets and North Asia equity returns may converge in 2023, in our view.
In our base case, we project a 6% upside for the MXASJ to 630 by end-2023. This assumes EPS
of $46/$46/$50 in 2022/23/24, vs consensus of $47/$50/$58, and P/E of 13x at end 2023, vs
current 12x. We assume a more upbeat outlook for 2024 by end-2023. The JPM business cycle
monitor (QMI) for Asia troughed in September and entered the Recovery zone in October. In
December 2022, China’s Central Economic Work Forum may offer further visibility over China’s
2023 cyclical upturn. Our data since the GFC suggests that when Asia growth recovery is not
accompanied by synchronized global recovery, Asia equity returns over the 3-6 months after
entering the Recovery zone averaged 11%. We appear to be in such a case right now. A likely
risk-off macro backdrop with DM markets trimming 2023 consensus EPS and equities weakening
accordingly in 1Q23 may send MXASJ to test 530 (-11%) or possibly lower, we think. Later in
2H23 though, markets may turn more optimistic over a synchronized global recovery sometime in
2024, particularly if there are signs of stabilizing geopolitical tensions. Our upside case on the
MXASJ is 700 (+18%).
Key market/sector calls: 1) OW China on its likely cyclical upturn ahead after a period of
wobbliness in re-opening. China equities (particularly Internet and value plays in Autos,
Industrials and Materials) offer GARP assuming geopolitical tensions stabilize in 2023. 2) OW
Indonesia (a structural beneficiary of supply chain relocation with improving current account
conditions); 3) OW Indian Banks/Healthcare/Staples, while consensus EPS are likely to get cut
into 1Q2023, we are owning the more defensive part of the market and we note that India is the
single most scalable growth market in Asia in the decade ahead albeit with valuation, FX and
twin-deficit headwinds in 2023; 4) OW Korea and Taiwan Tech (particularly names exposed to
China demand) now, but also being mindful of possible negative wealth effects in DM during
2023. We fund these OWs with small UWs across market-sectors, particularly in North Asia
Financials and Property. We are Neutral Korea/Taiwan/ASEAN and UW India/HK.
Style calls: Value over Low Vol/Momentum. A Recovery suggests that market internals may
switch from “late cycle” conditions of 2022 to “early cycle” conditions. In this transition, we
recommend Value over Low Vol. Our data shows that Low Vol is currently the most crowded
style while Value is most uncrowded. Momentum suffers from Late to Early cycle as it tends to
become highly correlated to Low Vol in late cycle conditions - as is the case now. Growth
performance does not materially change from Late to Early cycle, but other variables like
crowding and moves in bond yields may matter more. Among growth names, we prefer names
with stable and positive free cash flows and little refinancing needs trading at reasonable
valuation.
27
(1-212) 622-3601 01 December 2022
Figure 33: MXASJ end 2023 index targets: base/bull/bear Figure 34: MXASJ trend-adjusted fwd P/E very depressed
2023 11/28/2022 Base (F) Bull (F) Bear (F)
Index level 592 630 700 530
Implied upside/downside vs. Current level 6% 18% -11%
JPM 2022 EPS estimate (USD) and growth 46 -13%
JPM 2023 EPS estimate (USD) and growth 46 0%
JPM 2024 EPS estimate (USD) and growth 50 9%
Fwd P/E now and at end-2023 11.8 12.6 14.0 10.6
vs post-GFC average -0.3x sd +0.1x sd +1x sd -1.1x sd
Figure 35: The Asia business cycle monitor (QMI) has bottomed Figure 36: QMI-demarked cycles and style preference
L/S style performance - monthly average returns annualized
Figure 37: China and US equity risk premium Figure 38: China market decoupled from global markets in 2021,
%, Simple ERP = fwd EPS yield - 10yr bond yield. For China, bond yield is average some convergence could occur in 2023
of US and China %
Source for all: Bloomberg Finance L.P., Refinitiv Eikon, J.P. Morgan Equity Macro Research
28
(1-212) 622-3601 01 December 2022
Figure 39: Asia earnings downgrade cycle comparison

Length of Total fwd EPS Best I ndustries over Worst Industries over Style perf. Over Equity max drawdown Equity % of downgrade
Start End Key drivers
cycle (weeks) downgrade (%) downgrade cycle downgrade cycle downgrade cycle during downgrades bottom cycle
Healthcare, Energy, Low Vol / Quality over

8-Jul-08 10-Mar-09 35 -46% GFC Utilities, Telco, Insurance -53% 27-Oct-08 45%
Cap Goods Growth / Px Momentum
Trade war, China

Semis, Telcos, Healthcare, Autos, Low Vol / Quality over
12-Jun-18 3-Sep-19 64 -23% regulatory tightening, -21% 29-Oct-18 31%
Insurance Internet Value / Px Momentum
Memory downcycle
Avg of larger downgrades 50 -35% -37% 38%
US growth downgrade, EU Materials, Cap Goods, Low Vol / Quality over

9-Aug-11 27-Dec-11 20 -10% Semis, Telcos, Utilities -22% 5-Oct-11 41%
crisis, Inflation in Asia Div Fin. Growth / Px Momentum
China de-leveraging, Software, F&B, Div Fin, Insurance, Cap Growth / Quality over
9-Jun-15 5-Jul-16 56 -18% -28% 21-Jan-16 58%
Commodity downcycle Hardware Goods Px Momentum / Value
Healthcare, Internet, Growth / Quality over
21-Jan-20 9-Jun-20 20 -15% COVID Autos, Energy, Banks -29% 23-Mar-20 44%
F&B Low Vol / Value
Avg of smaller downgrades 32 -14% -26% 48%
Current, so far
China growth slump, global Growth / EPS Revs
8-Feb-22 25-Nov-22 41 -17% Pharma, Energy, Autos Semis, Media, Insurance -34% 24-Oct-22
CB tightening over Low Vol / Quality
Figure 40: MXASJ: average fwd EPS trajectory in the EPS downgrade Figure 41: MXASJ: average market trajectory in the EPS downgrade
cycles cycles
x-axis represents % from start to end of downgrade cycle x-axis represents % from start to end of downgrade cycle
29
(1-212) 622-3601 01 December 2022
SouthEast Asia Strategy

Rajiv Batra AC
2023 will be another challenging year for Southeast Asia equity markets due to building rajiv.batra@jpmorgan.com
drag on activity from tightening financial conditions, weaker external demand impact
manufacturing/exporters, fading reopening boost and election cycle. Global growth forecast Khoi Vu
is below trend, as Fed Funds rate will reach 5% and a US recession is expected in 2023. Trade- khoi.t.vu@jpmorgan.com
oriented economies like Singapore, Thailand, Vietnam and Malaysia will be impacted. The worst
J.P. Morgan Securities Singapore Private
moves for risky asset classes are seen in US recessions with large widening in credit spreads and Limited
lower equity prices that are typically bigger than at any other point in the cycle. ASEAN equities
has historically followed these patterns and we expect higher risk premia into a US recession. We Wendy Liu (Asia/China)
have witnessed 16% sell-off over the last 8 months driven by multiple de-rating and currency
depreciation. Despite this, ASEAN countries ex Malaysia & Vietnam are still trading rich, above J.P. Morgan Securities (Asia Pacific) Limited/
median bear-market trough valuations. We are moving Singapore equities from overweight to J.P. Morgan Broking (Hong Kong) Limited
neutral.
Our bigger concern is that the 2023 consensus earnings forecast still seems high despite the
fact that it has drifted down over the last few months. Slower global growth and weaker
demand for durable consumer goods is already significantly impacting exporters, particularly
technology hardware producers. The lagged effect of monetary policy tightening suggests further
cuts in revenue growth next year due to lower domestic demand and pricing. Lower savings and
rising cost of borrowing will impact purchasing power. China reopening impulse is expected to be
modest given global recessionary conditions. Hence, in 1H23 we expect MSCI ASEAN to re-
test this year’s lows and potentially move even lower (575). Separately, pressures are building
on newly elected governments and those facing elections in 2023-24 to meet social demands
arising from the incomplete post-pandemic recovery, slowing the pace of fiscal consolidation.
That said, ASEAN equities can offer defensive quality – having the lowest volatility in last
10 years after US and Japan. Structural growth has decidedly improved, on rising FDIs as more
MNCs and Chinese companies relocate parts of the supply chain into the region for cost benefits
as well as supply chain security considerations. Such FDI investments are poised to raise levels of
industrialization, urbanization, create jobs, raise general income and wealth levels in the
destination markets. Despite strong inflows into Indonesia, Thailand, Malaysia this year,
allocation to ASEAN equities is still at an early stage. Domestic oriented markets like
Indonesia and Philippines will be less impacted by DM recessionary environment. However
twin deficit in the Philippines expected to remain elevated and suggest limited degrees of policy
freedom. In Indonesia, fiscal deficit is expected to come in below 3% and fiscally the overall cash
position is over 3.5% of GDP.
Greater global macro uncertainty promotes local idiosyncratic factors. Market, sector and
company performance diverge as returns are driven by local financing costs and the relative
resilience of profits. Our base case projects only 3% upside for the MSCI ASEAN to 650 by
year-end 2023. We recommend investors to blend their portfolio: valuation cushion, earnings
resilience and rewarding good policy-making in the ASEAN region. Our preference order in
ASEAN is Indonesia > Thailand > Singapore > Malaysia > Philippines. We stay OW Vietnam
as a structural, off-index play. We expect relative outperformance of defensive styles (Quality and
Momentum and sectors (Staples, Health Care and Utilities).
30
(1-212) 622-3601 01 December 2022
Figure 42: Lackluster earnings growth (%) during US Figure 43: Policy rates hike will continue in 2023 (in bps)
recession/global slowdown historically
Philippines
Year MY TH ID PH SG ASEAN
2008 (13.2) 14.6 4.7 (13.2) (12.7) (7.6)
2009 (19.9) 35.1 10.6 14.7 (10.3) (3.3) Vietnam
2010 26.4 28.5 22.2 48.5 26.8 27.0
2011 7.8 14.1 19.8 3.8 (2.3) 6.2
2012 15.6 16.3 13.7 9.1 6.9 11.6 Indonesia
2013 1.0 6.4 3.4 8.7 (4.4) 0.7
2014 (5.2) (7.1) 8.2 7.7 8.9 2.8
2015 (1.2) (1.1) (8.5) 5.9 (2.1) (2.4)
Malaysia
2016 0.5 16.9 3.7 8.3 (9.0) 0.8
2017 (1.3) 11.7 15.8 3.7 8.2 8.1 Thailand
2018 0.5 (2.7) 9.7 4.0 9.6 4.3
2019 (8.8) (8.9) (0.2) 12.2 0.1 (2.8)
2020 (37.0) (45.0) (24.6) (45.8) (35.8) (36.5) 0 100 200 300 400
2021 92.0 59.0 43.0 59.0 49.0 58.0
2022 (8.2) 19.0 36.0 18.0 81.0 31.0 YTD Forecast chg till 4Q23
2023E 12.9 8.9 6.0 18.3 21.8 14.0
Source: IBES, MSCI, Refinitiv. Note, 2023 earnings growth is consensus forecast. Source: Central banks data, J.P. Morgan Economics Estimates
Figure 44: Fiscal consolidation in 2023 limit growth prospects Figure 45: ASEAN one of the least volatile markets
2.5 10.0
Forecasted change in fiscal balance in 2023 vs. 2022 (%GDP) 10Y Average of 6M Rolling standard deviation of monthly returns (US$
9.0 terms)
8.0
2.0
7.0
6.0
1.5 5.0
4.0
1.0 3.0
2.0
0.5 1.0
0.0
Japan
Europe
Australia
China
India
ASEAN
AxJ
Germany
US
UK
HK
EM
Russia
Brazil
0.0
Philippines Singapore Indonesia Thailand Malaysia Vietnam
Source: J.P. Morgan Economics Source: MSCI, Refinitiv
Figure 46: Allocation to ASEAN equities is still in the early stage Figure 47: ASEAN share in global FDI flows is on the rise (%)
60
16
Cummulative flows to 13.7
50 ASEAN equities since 2005 14
(US$bn) 11.9
40 12 10.4
9.5
30 10
20 8
5.8 5.6
6
10
4
0
2
-10
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2015 2016 2017 2018 2019 2020

Source: Bloomberg Finance L.P., EPFR Global. Source: ASEAN Secretariat, ASEAN FDI database.
31
(1-212) 622-3601 01 December 2022
Australia Strategy Jason Steed AC

jason.h.steed@jpmorgan.com
Following a decade of underperformance, Australia finally came into its own through 2022.
In the YTD, the ASX 200 has outperformed the MSCI World (ACWI) by 1758bp. The two Emily Macpherson
largest sectors, Financials (+1357bp rel) and Materials (+1990bp rel) buttressed the gains. emily.c.macpherson@jpmorgan.com
J.P. Morgan Securities Australia Limited

The macro backdrop remains supportive. Businesses continue to report buoyant operating
conditions and strong forward order books. While the consumer faces increasing cost-of-
living pressures, household balance sheets are by and large robust.
Figure 48: CY23 EPS Growth Bridge
Unemployment is projected to rise in 2023, but not to the same extent as the US and Europe. (JPMe)
Wage pressures are building, but the rate of increase is constrained by the widespread use of 10.0%
0.9%
0.6% 0.3% 0.1% 0.1% 0.1% 0.1% -2.9%
enterprise bargaining across Australia. While inflation is elevated, the RBA expects a 8.0%
1.7%
-5.1%
marked moderation in 2023 and does not foresee a wage price spiral. Our economists are
6.0%
4.4%
forecasting one more 25bp hike before an extended pause at 3.10%.

4.0%
2.0%
0.4%
Earnings outlook and index target
Health Care
Real Estate
ASX200
Financials
Industrials
Utilities
Information Technology
Consumer Staples
Consumer Discretionary
Communication Services
Energy
Materials
Our Dec-23 target for the ASX 200 is 7,400. We use a combination of top-down and bottom-
up approaches to formulate our target. Our key OW sectors are Financials and Healthcare,
Source: J.P. Morgan estimates.
while our deepest UWs are in Staples and REITS.
Our team’s aggregated bottom-up earnings projections for CY23 point to an uplift of 0.4%.
Materials is expected to be a significant drag at a headline level. Ex. Materials, our projected
earnings growth is +8.6%.
32
(1-212) 622-3601 01 December 2022
Emerging Europe, Middle East, and Africa Strategy David Aserkoff, CFA AC
david.aserkoff@jpmorgan.com
We expect the problems of 2022 - Fed tightening, below-trend global growth - to
continue into 2023. Flat oil prices, strong USD/weak EM FX (CE3 and ZAR especially) and J.P. Morgan Securities plc
weak S&P 500 are additional headwinds for CEEMEA stocks. China’s COVID reopening -
Inga Q Galeni AC
with its potential delta on commodity demand and global appetite for EM assets - is the key inga.galeni@jpmorgan.com
near-term catalyst. Still, our end’23 index target for MSCI EMEA of 220 versus 197 now
J.P. Morgan Equities South Africa (Pty) Ltd.
offers 12% upside with 15% upside in Saudi and GCC versus 8% in SA and CE3. Most of
those returns should be back-end loaded. Our asset allocation is still OW Saudi & MENA Pedro Martins Junior, CFA
versus UW South Africa with Emerging Europe (CE3, Greece and Turkey) an under- (Emerging Markets)
enthused neutral. Within EM Europe, we favor Greece for its own growth drivers and cheap pedro.x.martins@jpmorgan.com
but healthy banks. Banco J.P. Morgan S.A.
MENA is our key OW in the region. It offers the macro stability of FX-pegged returns
and current account surpluses. If our FX team’s forecast of a rising USD and weak EMEA Figure 49: Saudi relative performance is
EM FX is correct, then GCC should outperform the region again - its relative performance is driven more by the USD than oil
more about the USD and less about oil. Tadawul’s recent drop is about key local factors - the 270 48
250
SNB-CS deal, the STG placement and weak 3Q earnings - which we think will fade; the 230
50
upside catalyst would be a consumer-oriented ‘23 budget from Saudi. Saudi has de-rated by 210 52
20% since May down to 14.5x 12m fwd PE; we expect 15% upside for the market in ‘23. 190
54
Key sector OW’s remain financials and consumer-facing sectors including health care. We 170
150 56
would also OW UAE’s booming real estate and tourism sector via real estate. Foreign Jan-22 Apr-22 Jul-22 Oct-22
MSCI Saudi v EM EM FX Index (RHS, inverted)
positioning remains tiny with the majority of GEM funds still zero weight in Saudi, EM’s
6th biggest market and GEM funds UW all MENA markets. Lower oil prices and/or a
weaker USD are key risks to our call. Source: J.P. Morgan, Bloomberg Finance L.P.
33
(1-212) 622-3601 01 December 2022
Latin America Strategy Emy Shayo Cherman AC (LatAm)

jason.h.steed@jpmorgan.com
Global setup x Local idiosyncrasies: Key 2023 investment themes
 Latin America will enter a monetary policy expansion phase, in contrast to DM, and probably Banco J.P. Morgan S.A.
more aggressively than other EMs, which should allow it to reach double digit returns. Diego Celedon
diego.celedon@jpmorgan.com
 The main source of LatAm returns is through re-rating, considering that valuations are at
multi year lows. Consensus earnings at this point are positive only for Mexico, but we do Inversiones J.P. Morgan Limitada
expect upward revisions, especially in the commodity space.
Adrian E Huerta
 Positive optionalities for LatAm include China re-opening and DXY weakness. This is a adrian.huerta@jpmorgan.com
powerful combination that would provide sustainability for commodity prices even within a J.P. Morgan Casa de Bolsa, S.A. de C.V.,
US recession. J.P. Morgan Grupo Financiero
 Fiscal policy remains the Achilles Heel for the region, considering growing post pandemic Pedro Martins Junior, CFA
social demands in an environment where growth is low and all the countries are under leftist (Emerging Markets)
pedro.x.martins@jpmorgan.com
administrations.
Banco J.P. Morgan S.A.
 LatAm sector positioning: OW Materials, Financials Cons. Discretionary and Real Estate.
UW Industrials, Utilities, IT. N on energy on Ecopetrol’s removal from MSCI and policy Table 8: LatAm Major Index Targets,
risk at Petrobras. YE 2023
LatAm Brazil Chile Colombia Mexico Peru
Country views Year end MXLA Ibovespa IPSA IGBC IPyC S&PBVL
 OW Brazil: Very cheap market to re-rate on the start of the easing cycle by mid-year. Big
Current 2,181 109,748 5,312 1,231 51,570 21,888
Base 2,600 136,500 6,400 1,400 60,000 23,000
beneficiary of China reopening and optionality of a weaker USD. Fiscal policy risk likely to Bull
Bear
2,800
2,000
145,000
101,400
6,800
4,800
1,600
1,000
67,400
45,800
26,300
17,200
be mitigated by a conservative Congress and, eventually, higher taxes. Base 19.2% 24.4% 20.5% 13.7% 16.3% 5.1%
Bull 28.4% 32.1% 28.0% 30.0% 30.7% 20.2%
Bear -8.3% -7.6% -9.6% -18.8% -11.2% -21.4%
 OW Chile: Easing cycle likely to be the largest in the world, at the same time that valuations
Source: J.P. Morgan estimates, as of November 21,
are cheap and political risk, which dominated the last few years, is now marginal. Risk is 2022
lower copper and higher oil prices.
 N Mexico: The eventual recession in the US and a weaker USD could weigh on Mexico Figure 50: LatAm 12 mo fwd PE
more than other LatAm markets. Valuations are the highest in LatAm, but at the same time,
it is the only market that currently has positive 2023 earnings expectations. Nearshoring
theme is a big long term attraction.
 N Colombia: Policy uncertainty, especially on energy. Still, high oil prices is a strong
support for fiscal and current account, lifting a very cheap equity market.
 UW Peru: Highest growth in the region along with big rate cuts, but political uncertainty
makes the government unable to lead a growth agenda. Source: Bloomberg Finance L.P.; MSCI; J.P. Morgan
MSCI LatAm Target 2,600

MSCI LatAm 2023 year-end target of 2,600 (+20%) is driven mainly by re-rating as earnings
should be negative or significantly lower than in 2021 due to lower growth, higher rates, and a
high base of comparison, especially in the commodity sectors.
 Bull case: MSCI LatAm at 2,800 (+30%): Strong China rebound leads commodity prices
higher at the same time that disinflation in the US allows for the Fed to pivot early in the
year, leading to a depreciation of the DXY. Risk on is back and policymaking in the region is
responsible on the fiscal side, allowing for the front loading of easier monetary policy across
the region. That translates into higher growth than currently forecasted, allowing LatAm to
remain at the forefront of global markets.
 Bear case: MSCI LatAm at 2,000 (-10%): Despite very cheap valuations, the region
follows the decline of the S&P 500 in 1H as inflation remains stubborn, the Fed hikes and a
US recession takes hold. Covid-19 in China remains an impediment to growth, leaving EM,
and especially LatAm, without any tailwinds.
34
(1-212) 622-3601 01 December 2022
Equity Index Technical Strategy

Jason Hunter AC
From a technical and cross-market perspective, the sawtooth pattern of the S&P 500 Index 2022 jason.x.hunter@jpmorgan.com
bear market and high correlation of equities to features that define the shape of the money market
curve imply a market that has adjusted the multiple as a function of shifting Fed expectations, but Alix Tepper Floman
not one that has priced for an impending recession. The latter often is associated with a more alix.tepper.floman@jpmorgan.com
accelerated sell-off phase, where the market sees a period that it doesn’t respond to bullish
technical signals. In our view, the speed at which the inflation data normalizes into early 1Q23
and the associated adjustments in how fast the market assumes the Fed will eventually normalize
the policy rate will dictate whether the S&P 500 Index sees something more akin to a retest of
major support that includes the 3507 4Q22 pattern breakout, 3505 Mar 2020 50% retrace and
3491 Oct 2022 low, or a breakdown and bearish acceleration. While the technicals setup
associated with the S&P 500 Index Oct bottom matched the conditions at past lasting bullish
reversals, we recognize past periods of persistent fundamental pressures like inflation-induced
hawkish policy have also seen a resurgence of selling pressure and another bottom structure at
lower prices. In the event the inflation data whipsaws and the 2H23 market implied eases are
removed from the money market curve, we believe the S&P 500 can slide to next support that
includes the 3209 4Q20 range low and 3195 Mar 2020 61.8% retrace before rebasing. One way or
the other, we see the equity market bullishly reversing in the first half and likely first quarter of
next year. The coming inflation prints will likely dictate the nature and location of that reversal.
To higher prices, we think the 4100-4300 resistance zone will likely contain the index through
most of next year. For full details, please see our global rates, equity index, foreign exchange, and
commodity outlook here.
Exhibit T1: The S&P 500 Index 4Q22 rebound from key support near 3500 and the bullish technical setup
that developed as the market tested that area is closing in on resistance we expect to contain the market
for much of the next year (4100-4300). We expect at least a retest of the Oct 2022 trough in 1Q23, with the
potential for the index to slide toward support near 3200 if the inflation data remains sticky and drives a
hawkish repricing in Fed expectations. Either way, we see the index bottoming in the first half of next year
and emerging from a bullish base pattern in the second half.
S&P 500 Index, weekly bars
Source: J.P. Morgan; CQG
35
(1-212) 622-3601 01 December 2022
Global / SMid Strategy

Eduardo Lecubarri AC
The current fundamental snapshot of SMid is positive... On one hand, one could argue eduardo.lecubarri@jpmorgan.com
that the outlook is not too bleak given that 1) inflation has peaked and the FED is talking
about slowing the pace of hikes which bodes well for the higher growth / higher beta SMid J.P. Morgan Securities plc
asset class; 2) SMid balance sheets are strong (ND/EBITDA stands at just 0.6x which is
Saurabh Jain
halve the leverage of Large-Caps); 3) valuations show SMid is trading not just below Large- saurabh.x5.jain@jpmchase.com
Caps but at a higher discount that they have historically; and 4) most SMid sectors are within
a reasonable range when it comes to valuation, balance sheet strength, and growth estimates J.P. Morgan India Private Limited
(i.e. we don’t see a clear bubble).
…but there is no shortage of risk looking forward… 1) interest rates have risen ~400 bps Is the higher WACC priced in?
Upside/Downside to Indices under different WACCs
already at a time when record numbers of SMid-Caps don’t make any money (29% of US S&P 500 MSCI
Ex Fin Europe
SMids have negative earnings, as do 14% of SMids in Cont. Europe, and 11% of their UK & RE Ex Fin*
peers… highest ever %’s); with 2) meaningful tail risk (i.e. we are not just talking Cost of Equity 9.25% 10.75%
- FCF Yld 4.10% 5.70%
Russia/Ukraine, but the fact that this is the first time in more than half a century when we - EPS CAGR** 5.15% 5.05%
have seen such shocks to the economy — the FED funds rate, US’s CPI, the US 10 Yr Gov Cost of Debt pre Fed Funds Hike
Debt/Equity Ratio
3.50%
19.49%
2.70%
26.72%
Bond Yield, Oil, Agricultural commodities, Metals, and the US$, have all spiked > 2 Implied WACC 8.19% 8.93%
2022 Index Peak 5,783 2,648
standard deviations above their 2 year moving averages… something not seen before as far Current Index Level 4,748 2,422
back as we have data). Upsd/Dnsd from '22 Peak if…
- (b) Cost of Debt up 400 bps -14.49% -14.55%
Implied WACC 8.71% 9.59%
- (c) Cost of Debt up 450 bps -16.01% -16.07%
…at a time when the YTD correction is only discounting the higher WACC… Implied WACC 8.77% 9.67%
Increasing last year’s cost of debt by 400 bps moves the WACC of US and European EQs by - (d) Cost of Debt up 500 bps -17.48% -17.55%
Implied WACC 8.83% 9.75%
52 and 66 bps respectively, implying 14.5% downside from highs which is not far from Source: Bloomberg Finance L.P., J.P. Morgan
where these region’s indices are at present (see the table on the left). Note - * Financials & Real Estate have been removed
from MSCI Europe Index for all the calculations
** We have taken the lowest EPS CAGR of recent
…and SMid sentiment is still too bullish… a survey of the companies and investors cycles ('00-'07 for S&P & '09-'21 for MSCI Europe)
attending our recent US SMid conference this month showed they are all quite bullish, as is
the sell-side. On one hand, 44% of companies expect FCF to grow next year (only 26% see
it declining), with only 21% expecting headcount to decline while 54% see it increasing, and
only 18% of them being truly worried about tail risk. Meanwhile, 86% of investors expect
SMid-Caps to rally next year, with 57% expecting inflation to come down below 4% by EoY
2023, and 59% of them being close to fully invested at present. Sell-side expectations are
also quite bullish, calling for SMid-Caps to deliver double digit earnings growth in all
regions this year and next (+19.5% in ’22 and +21.8% in ’23 globally on an equal weighted
average ex outliers basis).
How to position?
 N SMid vs Large. SMids deliver the best relative returns in the first 12 mths post an equity
market trough, and this time have a far stronger outlook (Link), so we will wait for that
trough to take place before turning OW.
 OW Value vs Growth. GAAP (growth at any price) has starting to fall into GARP but
valuation dispersion still remains near highs excluding the tech bubble. In fact, >20% of
SMid-Caps in any region are below replacement value (i.e. 1.0x P/B).
 Stick to that part of the SMid market that appears heavily undervalued (30% of all
SMid-Caps are down >40% already, while many trade on single digit multiples after
years of underperforming). This brings us to Energy Equip & Services, Materials,
Infrastructure plays, Cons. Discretionary in the US (not Europe), and individual stocks that
are just too cheap.
 Two thematic baskets in European and/or US SMid-Caps: 1) OW headcount light vs
labor intensive businesses; and 2) OW cash rich balance sheets vs financially geared ones.
36
(1-212) 622-3601 01 December 2022
Figure 9: SMid Caps by decile of YTD Performance — 30% of SMid-Caps are already down >40%!
DECILE Global Cont. Europe UK US/Can Japan Aus/NZ CEEMEA Asia ex-J LatAm
Highest 66% 51% 32% 59% 49% 64% 137% 56% 88%
2nd 12% 5% 1% 8% 18% 8% 35% 8% 33%
3rd 0% -5% -11% 1% 8% -6% 12% -3% 16%
4th -7% -12% -18% -6% 3% -15% 2% -11% 5%
5th -14% -19% -24% -16% -1% -22% -4% -17% 0%
6th -21% -26% -31% -26% -5% -28% -11% -23% -4%
7th -28% -34% -38% -37% -10% -33% -18% -29% -12%
8th -36% -42% -46% -49% -16% -43% -23% -35% -20%
9th -47% -52% -56% -64% -24% -52% -32% -44% -33%
Lowest -68% -71% -74% -83% -43% -72% -50% -61% -55%
Average -14% -21% -26% -21% -2% -20% 5% -16% 2%
Source: Bloomberg Finance L.P., J.P. Morgan Calculations.
Figure 10: SMid vs Large-Cap Performance during equity cycles (from recession troughs to the next recession) —
The best relative returns of SMids happen in the first 12 months post a trough!
Annualized Rel. Perf (Russel 2000 less S&P 500) post recession-linked equity market troughs
Years 5+ (Ex -
S&P 500 Russell 2000 Last 12 m ths Peak to
Recession Dates Year 1 Year 2 Year 3 Year 4 Year 5 12 m ths pre
Trough Dates Trough Dates to Cycle Peak Trough
cycle peak)
Jan '80 - July '80 Mar-27, 1980 Mar-27, 1980 38% 33% -7%
Jul '81 - Nov '82 Aug-12, 1982 Aug-16, 1982 36% -11% 0% -12% -14% 3% -8% -18%
Jul '90 - Mar '91 Oct-10, 1990 Oct-30, 1990 25% 1% 20% -3% -7% -14% 42% -2%
Mar '01 - Nov '01 Oct-9, 2002 Oct-9, 2002 31% 2% 4% 2% -1% NA 2% -2%
Dec '07 - Jun '09 Mar-9, 2009 Mar-9, 2009 29% 7% -3% -1% 7% -1% -8% -12%
Avg 31.8% -0.4% 5.2% -3.3% -3.7% -4.2% 12.3% -8.1%
Source: Bloomberg Finance L.P., J.P. Morgan Calculations.
Figure 11: Impact on EBITDA of a 7.75% increase in Salary Expense (SMid-Caps by quintile of Salary Expense / EBITDA) —
The most exposed quintile can see up to 43.5% of its EBITDA wiped out!
Percentage impact on EBITDA by Quintiles of Labor Expense/EBITDA
QUINTILE UK Cont. Europe US/Can Japan Aus/NZ CEEMEA Asia ex-J LatAm
Highest -35.3% -43.5% -42.5% -16.1% -29.6% -20.1% -17.4% -18.9%
2nd -18.5% -22.7% -20.6% -8.6% -16.6% -9.5% -9.1% -9.3%
3rd -12.3% -13.6% -9.6% -5.1% -10.1% -5.0% -5.3% -5.0%
4th -6.3% -7.8% -3.6% -3.0% -6.1% -2.2% -3.1% -2.4%
Lowest -1.2% -1.7% -0.8% -1.2% -1.9% -0.7% -1.3% -0.9%
Source: J.P. Morgan Calculations, Bloomberg Finance L.P., Factset; Excludes Financials, Real Estate
Figure 12: Impact on EBITDA of the YTD rise in interest rates (SMid-Caps by quintile of Interest Expense / EBITDA) —
The most exposed quintile can also see up to 40% of EBITDA erased!
Impact on Interest Expense to EBITDA by Quintiles
QUINTILE UK Cont. Europe US/Can Japan Aus/NZ
Highest -37.6% -40.5% -30.6% -1.5% -16.0%
2nd -16.0% -16.0% -14.6% -0.6% -7.6%
3rd -8.1% -8.3% -7.1% -0.3% -4.2%
4th -4.0% -4.2% -2.6% -0.1% -2.0%
Lowest -0.9% -1.6% -0.1% 0.0% -0.3%
Source: J.P. Morgan Calculations, Bloomberg Finance L.P., Factset; Excludes Financials, Real Estate
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Tradeable Thematic Baskets

China Reopening Beneficiaries (JPGLCHRO <Index>)
Companies expected to benefit by generating more revenue or material savings as the Chinese economy eases Covid
restrictions such as consumer goods, services, and / or cost savings from reopening. It also includes: (a) Consumer
Reopening plays – Companies exposed to Chinese travelers / China consumer – Companies that have lost out on revenue
opportunities due to stricter lockdowns in China, and expect revenue/margin trends to improve as China reopens. (b)
Chinese fiscal spending plays – As China reopens, we expect more supportive fiscal backdrop. We are looking for
companies that could benefit from such a scenario. The baskets were created from stock picks by the sector analysts listed
in the figures below.
Figure 51: US Stocks that are likely Beneficiaries of China Reopening (JPUSCHRO <Index>)
Only below Stocks are used in constructing JPUSCHRO, Below Stocks and more are used in constructing JPGLCHRO, Weights optimized for tradeability and avoiding idiosyncrasy
Price Analyst PT
# Region Ticker Name Analyst Sector Industry Rating
(local) PT Upside
1 US CVX US Chev ron Corp John Royall Energy Oil, Gas & Consumable Fuels UW 182.0 143 (21.4% )
2 US PSX US Phillips 66 John Royall Energy Oil, Gas & Consumable Fuels OW 108.5 117 7.9%
3 US PARR US Par Pacific Holdings Inc John Royall Energy Oil, Gas & Consumable Fuels N 23.2 27 16.3%
4 US DD US Dupont De Nemours Inc Stephen Tusa Materials Chemicals NR 69.6 NA NA
5 US ATI US Ati Inc Seth Seifman Materials Metals & Mining OW 29.8 39 30.7%
6 US TDG US Transdigm Group Inc Seth Seifman Industrials Aerospace & Defense N 611.5 700 14.5%
7 US RTX US Raytheon Technologies Corp Seth Seifman Industrials Aerospace & Defense OW 97.3 102 4.9%
8 US BA US Boeing Co/The Seth Seifman Industrials Aerospace & Defense OW 177.5 170 (4.2% )
9 US CAT US Caterpillar Inc Tami Zakaria Industrials Machinery OW 233.7 247 5.7%
10 US CMI US Cummins Inc Tami Zakaria Industrials Machinery N 248.7 250 0.5%
11 US ITW US Illinois Tool Works Tami Zakaria Industrials Machinery OW 224.4 225 0.3%
12 US KMT US Kennametal Inc Tami Zakaria Industrials Machinery UW 25.8 23 (10.8% )
13 US FDX US Fedex Corp Brian Ossenbeck Industrials Air Freight & Logistics N 181.0 192 6.1%
14 US UPS US United Parcel Service-Cl B Brian Ossenbeck Industrials Air Freight & Logistics N 186.7 181 (3.1% )
15 US GRMN US Garmin Ltd Paul J Chung Discretionary Household Durables OW 91.3 108 18.4%
16 US IRBT US Irobot Corp Paul J Chung Discretionary Household Durables N 51.9 61 17.6%
17 US GPRO US Gopro Inc-Class A Paul J Chung Discretionary Household Durables N 5.4 6 11.9%
18 US LVS US Las Vegas Sands Corp Joseph Greff Discretionary Hotels, Restaurants & Leisure OW 46.5 51 9.7%
19 US WYNN US Wynn Resorts Ltd Joseph Greff Discretionary Hotels, Restaurants & Leisure OW 83.0 91 9.6%
20 US MLCO US Melco Resorts & Entert-Adr Joseph Greff Discretionary Hotels, Restaurants & Leisure OW 8.4 10 19.1%
21 US SBUX US Starbucks Corp John Ivankoe Discretionary Hotels, Restaurants & Leisure OW 100.7 100 (0.7% )
22 US YUM US Yum! Brands Inc John Ivankoe Discretionary Hotels, Restaurants & Leisure N 127.7 122 (4.4% )
23 US BKNG US Booking Holdings Inc Douglas Anmuth Discretionary Hotels, Restaurants & Leisure OW 2041.6 2,350 15.1%
24 US ABNB US Airbnb Inc-Class A Douglas Anmuth Discretionary Hotels, Restaurants & Leisure N 99.3 105 5.7%
25 US EXPE US Expedia Group Inc Douglas Anmuth Discretionary Hotels, Restaurants & Leisure N 105.1 117 11.4%
26 US FTCH US Farfetch Ltd-Class A Douglas Anmuth Discretionary Internet & Direct Marketing Re OW 8.4 15 77.9%
27 US OTLY US Oatly Group Ab Ken Goldman Staples Food Products OW 1.6 5 208.6%
28 US PG US Procter & Gamble Co/The Andrea Teixeira Staples Household Products N 147.3 141 (4.3% )
29 US EL US Estee Lauder Companies-Cl A Andrea Teixeira Staples Personal Products OW 231.1 220 (4.8% )
30 US ZLAB US Zai Lab Ltd-Adr Anupam Rama Health Care Biotechnology OW 38.8 79 103.7%
31 US PFE US Pfizer Inc Christopher Schott Health Care Pharmaceuticals N 49.4 50 1.1%
32 US TXG US 10X Genomics Inc-Class A Julia Qin Health Care Life Sciences Tools & Services OW 37.0 55 48.7%
33 US PACB US Pacific Biosciences Of Calif Julia Qin Health Care Life Sciences Tools & Services OW 10.3 13 25.8%
34 US V US Visa Inc-Class A Shares Tien-Tsin Huang Technology IT Services OW 213.8 243 13.7%
35 US MA US Mastercard Inc - A Tien-Tsin Huang Technology IT Services OW 351.0 395 12.5%
36 US TWKS US Thoughtworks Holding Inc Tien-Tsin Huang Technology IT Services OW 8.9 12 34.2%
37 US FLYW US Flywire Corp-Voting Tien-Tsin Huang Technology IT Services OW 21.3 35 64.6%
38 US DLB US Dolby Laboratories Inc-Cl A Paul J Chung Technology Software OW 74.0 80 8.1%
39 US LOGI US Logitech International-Reg Paul J Chung Technology Technology Hardware, Storage & OW 59.8 68 13.7%
40 US AAPL US Apple Inc Samik Chatterjee Technology Technology Hardware, Storage & OW 144.4 200 38.5%
41 US WDC US Western Digital Corp Harlan Sur Technology Technology Hardware, Storage & N 35.4 45 27.1%
42 US QCOM US Qualcomm Inc Samik Chatterjee Technology Semiconductors & Semiconductor OW 122.5 185 51.0%
43 US QRVO US Qorvo Inc Harlan Sur Technology Semiconductors & Semiconductor UW 95.7 90 (5.9% )
44 US TXN US Texas Instruments Inc Harlan Sur Technology Semiconductors & Semiconductor OW 175.5 195 11.1%
45 US INTC US Intel Corp Harlan Sur Technology Semiconductors & Semiconductor UW 29.0 32 10.5%
46 US NVDA US Nvidia Corp Harlan Sur Technology Semiconductors & Semiconductor OW 162.6 220 35.3%
47 US MU US Micron Technology Inc Harlan Sur Technology Semiconductors & Semiconductor OW 55.6 65 16.8%
48 US CSIQ US Canadian Solar Inc Mark Strouse Technology Semiconductors & Semiconductor N 35.1 42 19.5%
Source: J.P. Morgan Equity Macro Research, Bloomberg Finance L.P.
38
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Figure 52: DM ex-US Stocks that are likely Beneficiaries of China Reopening (JPDUCHRO <Index>)
Only below Stocks are used in constructing JPDUCHRO, Below Stocks and more are used in constructing JPGLCHRO, Weights optimized for tradeability and avoiding idiosyncrasy
Price Analyst PT
# Region Ticker Name Analyst Sector I ndustry Rating
(local) PT Upside
1 Europe SIKA SW Sika Ag-Reg Elodie Rall Materials C hemicals UW 237.0 203 (14.3% )
2 Europe HOLN SW Holcim Ltd Elodie Rall Materials C onstruction Materials N 48.8 59 21.0%
3 Europe AIR FP Airbus Se Dav id Perry Industrials Aerospace & Defense OW 109.2 185 69.4%
4 Europe SAF FP Safran Sa Dav id Perry Industrials Aerospace & Defense OW 117.4 160 36.3%
5 Europe MT X GR Mtu Aero Engines Ag Dav id Perry Industrials Aerospace & Defense OW 201.0 280 39.3%
6 Europe ABBN SW Abb Ltd-Reg Andrew Wilson Industrials Electrical Equipment N 29.4 28 (4.7% )
7 Europe SIE GR Siemens Ag-Reg Andrew Wilson Industrials Industrial Conglomerates OW 131.6 156 18.5%
8 Europe ATCOA SS Atlas Copco Ab-A Shs Andrew Wilson Industrials Machinery OW 129.2 135 4.5%
9 Europe SKFB SS Skf Ab-B Shares Andrew Wilson Industrials Machinery N 173.4 180 3.8%
10 Europe SCHP SW Schindler Holding-Part Cert Andrew Wilson Industrials Machinery N 177.2 210 18.5%
11 Europe ALFA SS Alfa Laval Ab Andrew Wilson Industrials Machinery UW 297.7 270 (9.3% )
12 Europe ITRK LN Intertek Group Plc Sylvia Barker Industrials Professional Services N 4045.0 4,500 11.2%
13 Europe ADP FP Adp Elodie Rall Industrials Transportation Infrastructure UW 146.8 114 (22.3% )
14 Europe PUM GR Puma Se Chiara Battistini Discretionary Tex tiles, Apparel & Lux ury Goo OW 48.4 90 85.9%
15 Europe ADS GR Adidas Ag Chiara Battistini Discretionary Tex tiles, Apparel & Lux ury Goo N 122.4 105 (14.2% )
16 Europe UHR SW Swatch Group Ag/The-Br Chiara Battistini Discretionary Tex tiles, Apparel & Lux ury Goo N 249.8 295 18.1%
17 Europe MC FP Lv mh Moet Hennessy Louis Vui Chiara Battistini Discretionary Tex tiles, Apparel & Lux ury Goo OW 737.3 750 1.7%
18 Europe RMS FP Hermes International Chiara Battistini Discretionary Tex tiles, Apparel & Lux ury Goo N 1542.5 1,390 (9.9% )
19 Europe AC FP Accor Sa Estelle Weingrod Discretionary H otels, Restaurants & Leisure UW 25.2 21 (16.7% )
20 Europe IHG LN Intercontinental Hotels Grou Estelle Weingrod Discretionary H otels, Restaurants & Leisure N 4797.0 5,900 23.0%
21 Europe ITX SM Industria De Diseno Tex til Georgina Johanan Discretionary Specialty Retail OW 24.9 31 24.7%
22 Europe ABI BB Anheuser-Busch Inbev Sa/Nv Jared Dinges Staples Beverages OW 56.1 70 24.9%
23 Europe RCO FP Remy Cointreau Celine Pannuti Staples Beverages N 164.8 205 24.4%
24 Europe RI FP Pernod Ricard Sa Celine Pannuti Staples Beverages OW 189.0 250 32.3%
25 Europe CARLB DC Carlsberg As-B Jared Dinges Staples Beverages UW 893.4 800 (10.5% )
26 Europe OR FP L'Oreal Celine Pannuti Staples Personal Products OW 354.8 400 12.7%
27 Europe EKT AB SS Elekta Ab-B Shs Dav id Adlington Health Care H ealth Care Equipment & Suppli UW 61.9 55 (11.1% )
28 Europe AZN LN Astrazeneca Plc James Gordon Health Care Pharmaceuticals OW 11166.0 12,500 11.9%
29 Europe HSBA LN Hsbc Holdings Plc Raul Sinha Financials Banks N 509.7 530 4.0%
30 Europe STAN LN Standard Chartered Plc Raul Sinha Financials Banks OW 617.4 770 24.7%
31 Europe UBSG SW Ubs Group Ag-Reg Kian Abouhossein Financials C apital Markets OW 17.2 21 20.2%
32 Europe AGS BB Ageas Farooq Hanif Financials Insurance UW 38.5 34 (11.6% )
33 Europe PRU LN Prudential Plc Farooq Hanif Financials Insurance OW 979.4 1,450 48.0%
34 Europe AMS SM Amadeus It Group Sa Toby Ogg Technology IT Services OW 51.3 61 19.0%
35 Europe HEXAB SS Hex agon Ab-B Shs Toby Ogg Technology Electronic Equipment, Instrume N 118.2 107 (9.4% )
36 Europe SXS LN Spectris Plc Andrew Wilson Technology Electronic Equipment, Instrume N 3174.0 3,050 (3.9% )
37 Europe IFX GR Infineon Technologies Ag Sandeep Deshpande Technology Semiconductors & Semiconductor N 31.6 39 22.0%
38 Europe STM FP Stmicroelectronics Nv Sandeep Deshpande Technology Semiconductors & Semiconductor N 36.1 48 33.1%
39 Europe ASML NA Asml H olding N v Sandeep Deshpande Technology Semiconductors & Semiconductor OW 561.1 690 23.0%
40 Europe INF LN Informa Plc Daniel Kerv en Comm Serv Media N 614.2 640 4.2%
41 Japan 4612 JT Nippon Paint Holdings Co Ltd Tomotaro Sano Materials C hemicals N 1120.0 1,200 7.1%
42 Japan 5411 JT Jfe Holdings Inc Hao Xin Materials Metals & Mining OW 1526.0 1,700 11.4%
43 Japan 5401 JT Nippon Steel Corp Hao Xin Materials Metals & Mining OW 2192.5 3,100 41.4%
44 Japan 6367 JT Daikin Industries Ltd Tomohiko Sano Industrials Building Products OW 22405.0 28,000 25.0%
45 Japan 6506 JT Yaskawa Electric Corp Tomohiko Sano Industrials Machinery N 4445.0 4,600 3.5%
46 Japan 6954 JT Fanuc Corp Tomohiko Sano Industrials Machinery UW 20365.0 16,000 (21.4% )
47 Japan 8001 JT Itochu Corp Chika Fukumoto Industrials Trading Companies & Distributo OW 4287.0 4,600 7.3%
48 Japan 9716 JT Nomura Co Ltd Keishi U eda Industrials Professional Services N 1032.0 1,050 1.7%
49 Japan 9009 JT Keisei Electric Railway Co Ry ota Himeno Industrials Road & Rail OW 3915.0 4,400 12.4%
50 Japan 7259 JT Aisin Corp Akira Kishimoto Discretionary Auto C omponents N 3765.0 4,200 11.6%
51 Japan 7201 JT Nissan Motor C o Ltd Akira Kishimoto Discretionary Automobiles N 491.2 550 12.0%
52 Japan 7453 JT Ryohin Keikaku Co Ltd Dairo Murata Discretionary Multiline Retail OW 1449.0 2,000 38.0%
53 Japan 9983 JT Fast Retailing Co Ltd Dairo Murata Discretionary Specialty Retail N 80810.0 90,000 11.4%
54 Japan 2267 JT Yakult Honsha Co Ltd Ami Yoshida Staples Food Products N 8750.0 8,200 (6.3% )
55 Japan 4911 JT Shiseido Co Ltd Ritsuko Tsunoda Staples Personal Products OW 5799.0 6,000 3.5%
56 Japan 7733 JT Olympus Corp Naoko Saito Health Care H ealth Care Equipment & Suppli OW 2806.0 3,200 14.0%
57 Japan 6981 JT Murata Manufacturing Co Ltd Masashi Itaya Technology Electronic Equipment, Instrume N 7464.0 7,400 (0.9% )
58 Australia ILU AU Iluka Resources Ltd Al H arvey Materials Metals & Mining OW 10.1 11 9.0%
59 Australia FMG AU Fortescue Metals Group Ltd Ly ndon Fagan Materials Metals & Mining N 19.4 16 (17.4% )
60 Australia BHP AU Bhp Group Ltd Ly ndon Fagan Materials Metals & Mining N 45.5 42 (7.7% )
61 Australia RIO AU Rio Tinto Ltd Ly ndon Fagan Materials Metals & Mining N 109.6 93 (15.2% )
39
(1-212) 622-3601 01 December 2022
Figure 53: Emerging Markets Stocks that are likely Beneficiaries of China Reopening (JPEMCHRO <Index>)
Only below Stocks are used in constructing JPEMCHRO, Below Stocks and more are used in constructing JPGLCHRO, Weights optimized for tradeability and avoiding idiosyncrasy
Price Analyst PT
(local) PT Upside
1 China 390 HK China Railway Group Ltd-H Karen Li Industrials C onstruction & Engineering OW 4.4 6 29.8%
2 China 3311 HK China State Construction Int Karen Li Industrials C onstruction & Engineering OW 9.4 12 29.4%
3 China 000338 CH Weichai Power Co Ltd-A Karen Li Industrials Machinery OW 10.7 17 55.6%
4 China 600031 CH Sany Heav y Industry Co Ltd-A Karen Li Industrials Machinery OW 15.9 20 25.7%
5 China 603338 CH Zhejiang Dingli Machinery -A Lin Chen Industrials Machinery OW 50.8 64 26.0%
6 China 601100 CH Jiangsu Hengli Hy draulic C-A Karen Li Industrials Machinery OW 65.8 81 23.2%
7 China 600009 CH Shanghai International Air-A Karen Li Industrials Transportation Infrastructure OW 55.5 65 17.2%
8 China 1368 HK Xtep International H oldings Qian Yao Discretionary Tex tiles, Apparel & Lux ury Goo OW 8.8 10 18.5%
9 China 1928 HK Sands China Ltd Ds Kim Discretionary H otels, Restaurants & Leisure OW 21.0 24 14.3%
10 China T COM US Trip.Com Group Ltd-Adr Alex Yao Discretionary H otels, Restaurants & Leisure N 31.9 27 (15.4% )
11 China 27 HK Galaxy Entertainment Group L Ds Kim Discretionary H otels, Restaurants & Leisure OW 46.7 56 19.9%
12 China YUMC US Yum China Holdings Inc Kev in Yin Discretionary H otels, Restaurants & Leisure OW 54.6 59 8.1%
13 China PDD US Pinduoduo Inc-Adr Andre Chang Discretionary Internet & Direct Marketing Re OW 83.3 110 32.0%
14 China 601888 CH China Tourism Group Duty F-A George Hsu Discretionary Specialty Retail OW 197.5 260 31.7%
15 China 1876 HK Budweiser Brewing C o Apac Lt Kev in Yin Staples Beverages N 22.4 18 (18.7% )
16 China 600600 CH Tsingtao Brewery Co Ltd-A Kev in Yin Staples Beverages N 101.3 95 (6.2% )
17 China 600519 CH Kweichow Moutai Co Ltd-A Kev in Yin Staples Beverages OW 1599.0 2,400 50.1%
18 China 700 HK Tencent Holdings Ltd Alex Yao Comm Serv Interactiv e Media & Services OW 287.2 410 42.8%
19 China 1209 HK China Resources Mix c Lifesty Karl Chan Real Estate Real Estate Management & Devel OW 37.0 45 21.8%
20 Asia xJP T ATA IN Tata Steel Ltd Pinakin Parekh Materials Metals & Mining OW 107.7 140 30.1%
21 Asia xJP HNDL IN Hindalco Industries Ltd Pinakin Parekh Materials Metals & Mining OW 450.7 520 15.4%
22 Asia xJP 004020 KS Hyundai Steel Co Sangmy eong Kim Materials Metals & Mining N 33,900 33,000 (2.7% )
23 Asia xJP 005490 KS Posco Holdings Inc Sangmy eong Kim Materials Metals & Mining N 299,500 270,000 (9.8% )
24 Asia xJP SIA SP Singapore Airlines Ltd Karen Li Industrials Airlines NR 5.5 NA NA
25 Asia xJP 694 HK Beijing Capital Intl Airpo-H Karen Li Industrials Transportation Infrastructure OW 5 7 45.1%
26 Asia xJP MAHB MK Malay sia Airports Hldgs Bhd Jeffrey Ng Industrials Transportation Infrastructure N 6.4 7 8.9%
27 Asia xJP AOT TB Airports Of Thailand Pcl Sumedh Samant Industrials Transportation Infrastructure N 75.0 72 (4.0% )
28 Asia xJP GENS SP Genting Singapore Ltd Jeffrey Ng Discretionary H otels, Restaurants & Leisure OW 0.9 1 30.7%
29 Asia xJP GENM MK Genting Malay sia Bhd Jeffrey Ng Discretionary H otels, Restaurants & Leisure OW 2.7 5 76.0%
30 Asia xJP GENT MK Genting Bhd Jeffrey Ng Discretionary H otels, Restaurants & Leisure OW 4.4 7 58.0%
31 Asia xJP 008770 KS Hotel Shilla Co Ltd Youna Kim Discretionary Specialty Retail UW 73,000 57,000 (21.9% )
32 Asia xJP T HBEV SP Thai Beverage Pcl Kae Pornpunnarath Staples Beverages OW 0.6 1 21.3%
33 Asia xJP 271560 KS Orion Corp/Republic Of Korea Youna Kim Staples Food Products OW 117,500 140,000 19.1%
34 Asia xJP 090430 KS Amorepacific Corp Youna Kim Staples Personal Products UW 130,500 82,000 (37.2% )
35 Asia xJP 051900 KS Lg H&H Youna Kim Staples Personal Products OW 656,000 870,000 32.6%
36 Asia xJP 034220 KS Lg Display Co Ltd Jay Kwon Technology Electronic Equipment, Instrume N 14,450 16,000 10.7%
37 Asia xJP CICT SP Capitaland Integrated Commer Merv in Song Real Estate Equity Real Estate Inv estment OW 2.1 2 18.4%
38 Asia xJP CPN TB Central Pattana Pub Co Ltd Kae Pornpunnarath Real Estate Real Estate Management & Devel N 72.5 66 (9.0% )
39 CEEMEA SABIC AB Saudi Basic Industries Corp Alex Comer Materials C hemicals N 83.0 120 44.6%
40 CEEMEA GLN SJ Glencore Plc Dominic O'Kane Materials Metals & Mining OW 11,416 13,500 18.3%
41 CEEMEA BHG SJ Bhp Group Ltd Dominic O'Kane Materials Metals & Mining N 52,316 47,800 (8.6% )
42 CEEMEA AGL SJ Anglo American Plc Dominic O'Kane Materials Metals & Mining OW 68,914 85,000 23.3%
43 CEEMEA MNDI LN Mondi Plc Detlef Winckelmann Materials Paper & Forest Products OW 1,543 1,760 14.1%
44 CEEMEA SAP SJ Sappi Limited Detlef Winckelmann Materials Paper & Forest Products UW 4,905 5,100 4.0%
45 CEEMEA MNP SJ Mondi Plc Detlef Winckelmann Materials Paper & Forest Products OW 31,530 37,100 17.7%
46 CEEMEA ADPORTS UHA bu Dhabi Ports Co Pjsc Anna Antonova Industrials Transportation Infrastructure OW 5.8 8 29.3%
47 CEEMEA PRX SJ Prosus Nv Marcus Diebel Discretionary Internet & Direct Marketing Re OW 110,450 156,000 41.2%
48 CEEMEA NPN SJ Naspers Ltd-N Shs Jonathan Kennedy-Good
Discretionary Internet & Direct Marketing Re OW 263,609 377,000 43.0%
49 CEEMEA BID SJ Bid Corp Ltd Detlef Winckelmann Staples Food & Staples Retailing N 33,361 35,700 7.0%
50 CEEMEA EMAARDEV UH
Emaar Dev elopment Pjsc Taher Safieddine Real Estate Real Estate Management & Devel OW 4.2 6 44.0%
51 CEEMEA EMAAR UH Emaar Properties Pjsc Taher Safieddine Real Estate Real Estate Management & Devel OW 6.1 8 24.2%
52 LatAm ALPEKA MM Alpek Sa De Cv Milene Carv alho Materials C hemicals OW 27.1 38 40.2%
53 LatAm BRKM5 BZ Braskem Sa-Pref A Milene Carv alho Materials C hemicals OW 28.4 55 92.1%
54 LatAm ORBIA* MM Orbia Adv ance Corp Sab De Cv Milene Carv alho Materials C hemicals N 36.6 54 47.5%
55 LatAm SQM US Quimica Y Minera Chil-Sp Adr Lucas Ferreira Materials C hemicals OW 97.8 141 44.1%
56 LatAm VALE US Vale Sa-Sp Adr Rodolfo Angele Materials Metals & Mining OW 16.5 18 5.8%
57 LatAm SUZB3 BZ Suzano Sa Rodolfo Angele Materials Paper & Forest Products OW 52.9 70 32.5%
58 LatAm STBP3 BZ Santos Brasil Participacoes Guilherme Mendes Industrials Transportation Infrastructure OW 7.5 12 53.7%
59 LatAm ALPA3 Alpargatas Sa Joseph Giordano Discretionary Tex tiles, Apparel & Lux ury Goo NR 14.2 NA NA
60 LatAm BEEF3 BZ Minerva Sa Lucas Ferreira Staples Food Products N 12.3 15 22.2%
40
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Deglobalization Theme – We expect significant relocation of manufacturing footprint out of China. Companies may opt
for a China+1 strategy, i.e. producing in China for China and moving the rest of the production elsewhere. For this
Deglobalization theme we created 2 baskets: (1) Nearshoring Beneficiaries and (2) Deglobalization Underperformers.
Nearshoring Beneficiaries (JPGNEARS <Index>)

Companies expected to benefit as countries reprioritize domestic/localized or diversified manufacturing (e.g. domestic
industrials / materials, etc). Suppliers are likely to benefit from increased demand for setting up factories (commodities
etc.). We see ASEAN, India, Mexico (LATAM) as likely beneficiaries. Some European companies could also look at
production in eastern part of Europe (Poland etc.). The baskets were created from stock picks by the sector analysts listed
in the figures below.
Figure 54: US Stocks that are likely Beneficiaries of Nearshoring (JPUNEARS <Index>)
Only below Stocks are used in constructing JPUNEARS, Below Stocks and more are used in constructing JPGNEARS, Weights optimized for tradeability and avoiding idiosyncrasy
Price Analyst PT
(local) PT Upside
1 US APD US Air Products & C hemicals Inc Jeffrey Zekauskas Materials Chemicals OW 303.5 290 (4.5% )
2 US LIN US Linde Plc Jeffrey Zekauskas Materials Chemicals OW 333.1 340 2.1%
3 US TPIC US Tpi Composites Inc Mark Strouse Industrials Electrical Equipment OW 11.9 21 77.0%
4 US ARRY US Array Technologies Inc Mark Strouse Industrials Electrical Equipment OW 21.1 33 56.4%
5 US SHLS US Shoals Technologies Group -A Mark Strouse Industrials Electrical Equipment OW 28.4 35 23.5%
6 US FATH US Fathom Digital Manufacturing Paul J Chung Industrials Machinery OW 2.4 NA NA
7 US DDD US 3D Sy stems Corp Paul J Chung Industrials Machinery UW 9.9 7 (29.0% )
8 US CP US Canadian Pacific Railw ay Ltd Brian Ossenbeck Industrials Road & Rail OW 81.2 85 4.4%
9 US GPC US Genuine Parts C o Christopher Horvers Discretionary Distributors OW 180.6 173 (4.2% )
10 US XMTR US Xometry Inc-A Cory Carpenter Discretionary Internet & Direct Marketing Re OW 41.0 55 34.1%
11 US CT LT US Catalent Inc Julia Qin Health Care Pharmaceuticals OW 49.4 100 102.3%
12 US TMO US Thermo Fisher Scientific Inc Rachel Vatnsdal Health Care Life Sciences Tools & Serv ices OW 552.0 650 17.8%
13 US DHR US Danaher Corp Rachel Vatnsdal Health Care Life Sciences Tools & Serv ices OW 267.1 315 17.9%
14 US WAT US Waters Corp Rachel Vatnsdal Health Care Life Sciences Tools & Serv ices N 339.8 330 (2.9% )
15 US A US Agilent Technologies Inc Rachel Vatnsdal Health Care Life Sciences Tools & Serv ices OW 151.8 170 12.0%
16 US MT LS US Materialise Nv-Adr Paul J Chung Technology Software OW 9.7 16 65.3%
17 US SSYS US Stratasys Ltd Paul J Chung Technology Technology Hardware, Storage & N 13.9 17 22.7%
18 US FLEX US Flex Ltd Paul J Chung Technology Electronic Equipment, Instrume OW 21.4 23 7.5%
19 US JBL US Jabil Inc Paul J Chung Technology Electronic Equipment, Instrume OW 71.2 80 12.3%
20 US PLXS US Plexus Corp Paul J Chung Technology Electronic Equipment, Instrume UW 108.5 90 (17.1% )
21 US ZBRA US Zebra Technologies Corp-Cl A Paul J Chung Technology Electronic Equipment, Instrume OW 267.4 330 23.4%
22 US GFS US Globalfoundries Inc Harlan Sur Technology Semiconductors & Semiconductor OW 63.7 75 17.8%
23 US ADI US Analog Devices Inc Harlan Sur Technology Semiconductors & Semiconductor OW 168.1 205 22.0%
24 US TXN US Texas Instruments Inc Harlan Sur Technology Semiconductors & Semiconductor OW 175.7 195 11.0%
25 US MCHP US Microchip Technology Inc Harlan Sur Technology Semiconductors & Semiconductor OW 76.7 92 19.9%
26 US LRCX US Lam Research C orp Harlan Sur Technology Semiconductors & Semiconductor OW 461.0 515 11.7%
27 US AMAT US Applied Materials Inc Harlan Sur Technology Semiconductors & Semiconductor OW 107.2 120 11.9%
28 US KLAC US Kla Corp Harlan Sur Technology Semiconductors & Semiconductor OW 386.4 410 6.1%
29 US FSLR US First Solar Inc Mark Strouse Technology Semiconductors & Semiconductor N 169.0 190 12.5%
30 US SEDG US Solaredge Technologies Inc Mark Strouse Technology Semiconductors & Semiconductor OW 296.0 358 20.9%
31 US ENPH US Enphase Energy Inc Mark Strouse Technology Semiconductors & Semiconductor OW 316.1 310 (1.9% )
32 US CSIQ US Canadian Solar Inc Mark Strouse Technology Semiconductors & Semiconductor N 35.2 42 19.5%
33 US ST AG US Stag Industrial Inc Michael Mueller Real Estate Equity Real Estate Inv estment N 32.3 34 5.3%
34 US PLD US Prologis Inc Michael Mueller Real Estate Equity Real Estate Inv estment OW 115.8 124 7.1%
35 US FR US First Industrial Realty Tr Michael Mueller Real Estate Equity Real Estate Inv estment N 49.8 53 6.5%
41
(1-212) 622-3601 01 December 2022
Figure 55: Global ex-US Stocks that are likely Beneficiaries of Nearshoring
Below Stocks and more are used in constructing JPGNEARS, Weights optimized for tradeability and avoiding idiosyncrasy
Price Analyst PT
(local) PT Upside
1 Europe SIE GR Siemens Ag-Reg Andrew Wilson Industrials Industrial Conglomerates OW 131.8 156 18.4%
2 Europe ATCOA SS Atlas Copco Ab-A Shs Andrew Wilson Industrials Machinery OW 129.2 135 4.5%
3 Europe HIK LN Hikma Pharmaceuticals Plc James Gordon Health Care Pharmaceuticals N 1,514.0 1,760 16.2%
4 Europe LONN SW Lonza Group Ag-Reg Richard Vosser Health Care Life Sciences Tools & Serv ices OW 490.2 770 57.1%
5 Europe CAP FP Capgemini Se Toby Ogg Technology IT Serv ices OW 171.0 200 17.0%
6 Europe WDP BB Warehouses De Pauw Sca Neil Green Real Estate Equity Real Estate Investment OW 25.3 31 22.5%
7 Europe BBOX LN Tritax Big Box Reit Plc Neil Green Real Estate Equity Real Estate Investment OW 143.0 175 22.4%
8 Europe SGRO LN Segro Plc Neil Green Real Estate Equity Real Estate Investment OW 790.8 960 21.4%
9 Japan 3407 JT Asahi Kasei Corp Tomotaro Sano Materials Chemicals N 1,019.0 1,150 12.9%
10 Japan 4183 JT Mitsui Chemicals Inc Tomotaro Sano Materials Chemicals N 3,100.0 3,250 4.8%
11 Japan 3941 JT Rengo Co Ltd Akiko Kuwahara Materials Containers & Packaging OW 866.0 1,160 33.9%
12 Japan 5401 JT Nippon Steel Corp Hao Xin Materials Metals & Mining OW 2,192.5 3,100 41.4%
13 Japan 5411 JT Jfe Holdings Inc Hao Xin Materials Metals & Mining OW 1,526.0 1,700 11.4%
14 Japan 5406 JT Kobe Steel Ltd Hao Xin Materials Metals & Mining OW 620.0 800 29.0%
15 Japan 6273 JT Smc Corp Tomohiko Sano Industrials Machinery OW 61,760 80,000 29.5%
16 Japan 9147 JT Nippon Express Holdings Inc Ry ota Himeno Industrials Air Freight & Logistics OW 8,090 9,100 12.5%
17 Japan 7203 JT Toyota Motor Corp Akira Kishimoto Discretionary Automobiles OW 2,011 2,300 14.4%
18 Japan 7267 JT Honda Motor Co Ltd Akira Kishimoto Discretionary Automobiles N 3,356 3,500 4.3%
19 Japan 4901 JT Fujifilm Holdings Corp Seiji Wakao Technology Technology Hardware, Storage & OW 7,315 13,000 77.7%
20 Japan 6861 JT Key ence Corp Tomohiko Sano Technology Electronic Equipment, Instrume OW 57,140 64,000 12.0%
21 Japan 6963 JT Rohm Co Ltd Masashi Itaya Technology Semiconductors & Semiconductor OW 10,850 15,000 38.2%
22 Australia BSL AU Bluescope Steel Ltd Lyndon Fagan Materials Metals & Mining OW 17.5 20 14.1%
23 Australia IGO AU Igo Ltd Lyndon Fagan Materials Metals & Mining OW 15.4 19 25.3%
24 Australia RWC AU Reliance Worldwide Corp Ltd Lisa Huynh Industrials Building Products OW 3.1 4 40.5%
25 China 268 HK Kingdee International Sftwr Ds Kim Technology Software OW 12.9 24 86.3%
26 China 600588 CH Yonyou Network Technology -A Ds Kim Technology Software N 22.9 24 4.8%
27 China 688200 CH Beijing Huafeng Test & Con-A Billy Feng Technology Semiconductors & Semiconductor OW 246.3 468 89.9%
28 China Greatec MK Greatech Technology Bhd Sean Teo Technology Semiconductors & Semiconductor OW 4.6 4 (10.9% )
29 China 3888 HK Kingsoft Corp Ltd Daniel Chen Comm Serv Entertainment OW 24.5 70 185.7%
30 Asia xJP LT IN Larsen & Toubro Ltd Deepika Mundra Industrials Construction & Engineering OW 2,075 2,200 6.0%
31 Asia xJP YZJSGD SP Yangzijiang Shipbuilding Ng Jun Jie Industrials Machinery OW 1.4 2 4.9%
32 Asia xJP WPRTS MK Westports Holdings Bhd Ng Jun Jie Industrials Transportation Infrastructure OW 3.4 4 14.0%
33 Asia xJP 1477 TT Makalot Industrial Co Ltd Bill Lin Discretionary Textiles, Apparel & Luxury Goo OW 233.0 210 (9.9% )
34 Asia xJP 1476 TT Eclat Tex tile Company Ltd Bill Lin Discretionary Textiles, Apparel & Luxury Goo OW 457.0 500 9.4%
35 Asia xJP 9910 TT Feng Tay Enterprise Co Ltd Bill Lin Discretionary Textiles, Apparel & Luxury Goo UW 186.5 160 (14.2% )
36 Asia xJP NEST IN Nestle India Ltd Latika Chopra Staples Food Products OW 20,184 21,200 5.0%
37 Asia xJP HUVR IN Hindustan Unilev er Ltd Latika Chopra Staples Personal Products OW 2,684 2,800 4.3%
38 Asia xJP ICICIBC IN Icici Bank Ltd Saurabh Kumar Financials Banks OW 952.9 1,150 20.7%
39 Asia xJP KCE TB Kce Electronics Pub Co Ltd Sean Teo Technology Electronic Equipment, Instrume OW 48.3 54 11.9%
40 Asia xJP AEM SP Aem Holdings Ltd Sean Teo Technology Semiconductors & Semiconductor OW 3.7 6 47.5%
41 Asia xJP 6415 TT Silergy Corp William Yang Technology Semiconductors & Semiconductor OW 450.0 550 22.2%
42 Asia xJP AREIT SP Capland Ascendas Reit Merv in Song Real Estate Equity Real Estate Investment OW - 3 NA
43 Asia xJP MINT SP Mapletree Industrial Trust Merv in Song Real Estate Equity Real Estate Investment OW 2.2 3 21.1%
44 CEEMEA SSW SJ Sibanye Stillwater Ltd Dominic O'Kane Materials Metals & Mining OW 4,667.0 8,000 71.4%
45 CEEMEA AMS SJ Anglo American Platinum Ltd Dominic O'Kane Materials Metals & Mining N 171,752 146,000 (15.0% )
46 CEEMEA IMP SJ Impala Platinum Holdings Ltd Dominic O'Kane Materials Metals & Mining NR 20,965 NA NA
47 CEEMEA T OASO T I Tofas Turk Otomobil Fabrika Hanzade Kilickiran Discretionary Automobiles OW 143.6 153 6.5%
48 CEEMEA FROTO TI Ford Otomotiv Sanay i As Hanzade Kilickiran Discretionary Automobiles OW 444.9 409 (8.1% )
49 CEEMEA ARCLK TI Arcelik As Hanzade Kilickiran Discretionary Household Durables N 92.0 78 (15.3% )
50 CEEMEA APN SJ Aspen Pharmacare Holdings Lt Alex Comer Health Care Pharmaceuticals OW 14,187 22,700 60.0%
51 LatAm SQM US Quimica Y Minera Chil-Sp Adr Lucas Ferreira Materials Chemicals OW 97.9 141 44.0%
52 LatAm WEGE3 BZ Weg Sa Marcelo Motta Industrials Electrical Equipment OW 38.4 47 22.5%
53 LatAm OMAB MM Grupo Aeroportuario Del Cent Guilherme Mendes Industrials Transportation Infrastructure N 164.5 180 9.4%
54 LatAm GAPB MM Grupo Aeroport Del Pacific-B Guilherme Mendes Industrials Transportation Infrastructure N 304.5 335 10.0%
55 LatAm T UPY3 BZ Tupy Sa Marcelo Motta Discretionary Auto Components OW 28.0 37 32.3%
56 LatAm NEMAKA MMNemak Sab De Cv Marcelo Motta Discretionary Auto Components N 5.8 6 (4.5% )
57 LatAm RA MM Regional Sab De Cv Yuri Rocha Fernandes Financials Banks OW 140.1 170 21.3%
58 LatAm GFNORTEO MM
Grupo Financiero Banorte-O Domingos Falavina Financials Banks OW 151.7 174 14.7%
59 LatAm FIBRAPL MMPrologis Property Mexico Sa Adrian Huerta Real Estate Equity Real Estate Investment N 58.5 60 2.5%
60 LatAm T ERRA13 Tf Administradora S De Rl De Adrian Huerta Real Estate Equity Real Estate Investment OW 27.8 33 18.7%
61 LatAm FIBRAMQ MMFibra Macquarie Mex ico Adrian Huerta Real Estate Equity Real Estate Investment OW 28.7 30 4.7%
62 LatAm FUNO11 MM Trust Fibra Uno Adrian Huerta Real Estate Equity Real Estate Investment OW 24.1 30 24.6%
63 LatAm VESTA* MM Corp Inmobiliaria Vesta Sab Adrian Huerta Real Estate Real Estate Management & Devel N 43.3 43 (0.7% )
42
(1-212) 622-3601 01 December 2022
Deglobalization Underperformers (JPGDGLOB <Index>)

Companies expected to lose from deglobalization (e.g. companies losing access to lowest cost producers such as importers /
consumer goods; multinationals could see more market access restrictions e.g. Tech Hardware (Semis, Phones), Industrials
(Autos, Capital Goods), Healthcare. Companies which have high production reliance on China and are likely facing large
capex to move out of China or potential supply risks from rising China related geo-political development. The basket was
created from stock picks by the sector analysts listed in the figure below.
Figure 56: Global Stocks that are likely at Disadvantage from Deglobalization (JPGDGLOB & JPUDGLOB <Index>)
Only US Stocks below are used in constructing JPUDGLOB, Below Stocks are used in constructing JPGDGLOB, Weights optimized for tradeability and avoiding idiosyncrasy
Price Analyst PT
(local) PT Upside
1 US ECL US Ecolab Inc Jeffrey Zekauskas Materials Chemicals OW 146.4 175 19.6%
2 US REZI US Resideo Technologies Inc Paul J Chung Industrials Building Products OW 15.8 26 64.3%
3 US FDX US Fedex Corp Brian Ossenbeck Industrials Air Freight & Logistics N 181.0 192 6.1%
4 US UPS US United Parcel Service-Cl B Brian Ossenbeck Industrials Air Freight & Logistics N 186.7 181 (3.1% )
5 US GPRO US Gopro Inc-Class A Paul J Chung Discretionary Household Durables N 5.4 6 11.9%
6 US GRMN US Garmin Ltd Paul J Chung Discretionary Household Durables OW 91.3 108 18.4%
7 US IRBT US Irobot Corp Paul J Chung Discretionary Household Durables N 51.9 61 17.6%
8 US SNPO US Snap One Holdings Corp Paul J Chung Discretionary Household Durables OW 8.0 13 62.3%
9 US FOLD US Amicus Therapeutics Inc Anupam Rama Health Care Biotechnology OW 11.8 16 35.1%
10 US CTSH US Cognizant Tech Solutions-A Tien-Tsin Huang Technology IT Services N 60.9 61 0.1%
11 US G US Genpact Ltd Tien-Tsin Huang Technology IT Services OW 45.6 55 20.7%
12 US WNS US Wns Holdings Ltd-Adr Puneet Jain Technology IT Services OW 83.7 109 30.3%
13 US EXLS US Exlserv ice Holdings Inc Puneet Jain Technology IT Services OW 184.2 190 3.1%
14 US LOGI US Logitech International-Reg Paul J Chung Technology Technology Hardware, Storage & OW 59.8 68 13.7%
15 US AAPL US Apple Inc Samik Chatterjee Technology Technology Hardware, Storage & OW 144.4 200 38.5%
16 US DELL US Dell Technologies -C Samik Chatterjee Technology Technology Hardware, Storage & OW 43.7 50 14.5%
17 US HPQ US Hp Inc Samik Chatterjee Technology Technology Hardware, Storage & N 29.3 27 (7.7% )
18 US COHR US Coherent Corp Samik Chatterjee Technology Electronic Equipment, Instrume OW 35.3 74 109.9%
19 US QRVO US Qorvo Inc Harlan Sur Technology Semiconductors & Semiconductor UW 95.7 90 (5.9% )
20 US SWKS US Sky works Solutions Inc Harlan Sur Technology Semiconductors & Semiconductor N 91.8 95 3.5%
21 Europe DPW GR Deutsche Post Ag-Reg Sam Bland Industrials Air Freight & Logistics N 38.0 42 9.3%
22 Europe DSV DC Dsv A/S Sam Bland Industrials Air Freight & Logistics OW 1,119 1,349 20.6%
23 Europe MAERSKB DCAp Moller-Maersk A/S-B Sam Bland Industrials Marine OW 15,350 28,900 88.3%
24 Europe KNIN SW Kuehne + Nagel Intl Ag-Reg Sam Bland Industrials Marine N 228.6 310 35.6%
25 Europe ADS GR Adidas Ag Chiara Battistini Discretionary Textiles, Apparel & Luxury Goo N 122.4 105 (14.2% )
26 Europe PUM GR Puma Se Chiara Battistini Discretionary Textiles, Apparel & Luxury Goo OW 48.4 90 85.9%
27 Europe GN DC Gn Store Nord A/S David Adlington Health Care Health Care Equipment & Suppli OW 168.9 208 23.1%
28 Japan 5233 JT Taiheiyo Cement Corp Mio Shikanai Materials Construction Materials N 2,167 2,100 (3.1% )
29 Japan 5201 JT Agc Inc Mio Shikanai Industrials Building Products OW 4,600 6,300 37.0%
30 Japan 7211 JT Mitsubishi Motors Corp Akira Kishimoto Discretionary Automobiles N 636.0 650 2.2%
31 Japan 7261 JT Mazda Motor Corp Akira Kishimoto Discretionary Automobiles N 1,091 1,250 14.6%
32 Japan 3436 JT Sumco Corp Tomotaro Sano Technology Semiconductors & Semiconductor N 2,023 2,100 3.8%
33 Australia IEL AU Idp Education Ltd Donald Carducci Discretionary Diversified Consumer Services OW 29.8 32 6.4%
34 Australia WES AU Wesfarmers Ltd Bryan Raymond Discretionary Multiline Retail UW 48.6 43 (11.1% )
35 Australia ANN AU Ansell Ltd David Low Health Care Health Care Equipment & Suppli OW 28.8 32 11.0%
36 China 1810 HK Xiaomi Corp-Class B Gokul Hariharan Technology Technology Hardware, Storage & N 10.3 12 11.4%
35 China 992 HK Lenov o Group Ltd Albert Hung Technology Technology Hardware, Storage & N 6.6 6 (8.8% )
36 China 002241 CH Goertek Inc -A Billy Feng Technology Electronic Equipment, Instrume N 18.1 24 32.3%
37 China 603986 CH Gigadevice Semiconducto-Cl A Billy Feng Technology Semiconductors & Semiconductor N 100.8 130 29.0%
38 China 603160 CH Shenzhen Goodix Technology-A Billy Feng Technology Semiconductors & Semiconductor N 52.0 95 82.6%
39 Asia xJP 1590 TT Airtac International Group Bill Lin Industrials Machinery N 945.0 780 (17.5% )
40 Asia xJP 2049 TT Hiwin Technologies Corp Bill Lin Industrials Machinery UW 186.0 160 (14.0% )
41 Asia xJP 005930 KS Samsung Electronics Co Ltd Jj Park Technology Technology Hardware, Storage & OW 62,200 80,000 28.6%
42 Asia xJP 034220 KS Lg Display Co Ltd Jay Kwon Technology Electronic Equipment, Instrume N 14,450 16,000 10.7%
43 Asia xJP 000660 KS Sk Hynix Inc Jj Park Technology Semiconductors & Semiconductor OW 85,000 120,000 41.2%
44 LatAm RAIZ4 BZ Raizen Sa - Preference Lucas Ferreira Energy Oil, Gas & Consumable Fuels OW 4.0 8 88.4%
45 LatAm BLAU3 Blau Farmaceutica Sa Joseph Giordano Health Care Biotechnology OW 28.5 31 8.9%
46 LatAm HYPE3 Hypera Sa Joseph Giordano Health Care Pharmaceuticals OW 44.2 48 8.7%
47 LatAm LABB MM Genomma Lab Internacional-B Joseph Giordano Health Care Pharmaceuticals OW 15.5 23 48.2%
43
(1-212) 622-3601 01 December 2022
Food Security Providers (JPGFOODS <Index>)

Companies that are resilient to disruption from agricultural product/input end market and changes to fertilizer access,
benefit from fiscal investments made in Agri space. The basket was created from stock picks by the sector analysts listed in
the figure below.
Figure 57: Global Stocks Resilient to Food Supply Chain Disruptions (JPGFOODS <Index>)
Below Stocks and more are used in constructing JPGFOODS, Weights optimized for tradeability and avoiding idiosyncrasy
Price Analyst PT
(local) PT Upside
1 US CTVA US Cortev a Inc Jeffrey Zekauskas Materials C hemicals OW 65.8 70 6.4%
2 US DE US Deere & C o Tami Zakaria Industrials Machinery N 437.0 440 0.7%
3 US CNHI US Cnh Industrial Nv Tami Zakaria Industrials Machinery OW 15.9 16 0.6%
4 US AGCO US Agco C orp Tami Zakaria Industrials Machinery OW 130.3 135 3.6%
5 US CP US Canadian Pacific Railway Ltd Brian Ossenbeck Industrials Road & Rail OW 81.2 85 4.4%
6 US CNI US Canadian N atl Railway Co Brian Ossenbeck Industrials Road & Rail N 126.8 128 1.2%
7 US PEP US Pepsico Inc Andrea Teixeira Staples Beverages OW 183.2 188 2.6%
8 US ADM US Archer-Daniels-Midland Co Thomas Palmer Staples Food Products N 96.1 84 (12.5% )
9 US BG US Bunge Ltd Thomas Palmer Staples Food Products OW 103.6 115 11.1%
10 US DAR US Darling Ingredients Inc Thomas Palmer Staples Food Products OW 70.5 92 30.5%
11 US COLD US Americold Realty Trust Inc Michael Mueller Real Estate Equity Real Estate Inv estment N 29.5 31 5.1%
12 Europe SDF GY K+S Ag-Reg Chetan Udeshi Materials C hemicals OW 21.0 26 24.0%
13 Europe YAR NO Yara International Asa Chetan Udeshi Materials C hemicals N 450.0 540 20.0%
14 Europe OCI NA Oci Nv Chetan Udeshi Materials C hemicals N 40.6 44 7.2%
15 Europe JMT PL Jeronimo Martins Borja Olcese Staples Food & Staples Retailing OW 21.2 21 (0.9% )
16 Europe TSCO LN Tesco Plc Borja Olcese Staples Food & Staples Retailing OW 227.5 240 5.5%
17 Europe SBRY LN Sainsbury (J) Plc Borja Olcese Staples Food & Staples Retailing UW 222.6 161 (27.7% )
18 Europe AD NA Koninklijke Ahold Delhaize N Borja Olcese Staples Food & Staples Retailing OW 27.8 31 11.5%
19 Europe CA FP Carrefour Sa Borja Olcese Staples Food & Staples Retailing N 16.4 19 15.7%
20 Europe BAYN GR Bay er Ag-Reg Richard Vosser Health Care Pharmaceuticals OW 55.6 77 38.5%
21 China 601100 CH Jiangsu Hengli Hy draulic C-A Karen Li Industrials Machinery OW 65.8 81 23.2%
22 China 000338 CH Weichai Power Co Ltd-A Karen Li Industrials Machinery OW 10.7 17 55.6%
23 China 000157 CH Zoomlion Heav y Industry S-A Karen Li Industrials Machinery N 5.8 5 (9.2% )
24 China 002714 CH Muy uan Foods Co Ltd-A Addison Dai Staples Food Products OW 48.1 82 71.6%
25 China 300498 CH Wens Foodstuffs Group Co - A Addison Dai Staples Food Products OW 18.0 27 50.3%
26 China 002311 CH Guangdong Haid Group Co-A Addison Dai Staples Food Products OW 56.6 79 38.8%
27 Asia xJP PCHEM MK Petronas Chemicals Group Bhd Sumedh Samant Materials C hemicals OW 8.5 11 28.8%
28 Asia xJP ESCORTS IN
E scorts Kubota Ltd Amyn Pirani Industrials Machinery UW 2,287 1,525 (33.3% )
29 Asia xJP MM IN Mahindra & Mahindra Ltd Amyn Pirani Discretionary Automobiles OW 1,306 1,575 20.6%
30 Asia xJP GENT MK Genting Bhd Jeffrey Ng Discretionary H otels, Restaurants & Leisure OW 4.4 7 58.0%
31 Asia xJP WIL SP Wilmar International Ltd Jeffrey Ng Staples Food Products OW 4.1 6 46.3%
32 Asia xJP NEST IN Nestle India Ltd Latika Chopra Staples Food Products OW 20,184 21,200 5.0%
33 Asia xJP TU TB Thai Union Group Pcl Kae Pornpunnarath Staples Food Products OW 17.1 22 28.7%
34 Asia xJP CPF TB Charoen Pokphand Foods Pub Kae Pornpunnarath Staples Food Products NR 23.9 NA NA
35 Asia xJP AALI IJ Astra Agro Lestari Tbk Pt Jeffrey Ng Staples Food Products OW 8,325 27,000 224.3%
36 CEEMEA SAFCO AB Sabic Agri-N utrients Co Alex Comer Materials C hemicals OW 144.2 179 24.1%
37 CEEMEA FERTIGLB UHFertiglobe Plc Alex Comer Materials C hemicals N 4.6 5 7.4%
38 CEEMEA IQCD QD Industries Qatar Alex Comer Industrials Industrial Conglomerates N 14.9 18 22.2%
39 CEEMEA BVT SJ Bidv est Group Ltd Detlef Winckelmann Industrials Industrial Conglomerates OW 23,222 27,300 17.6%
40 CEEMEA BIMAS T I Bim Birlesik Magazalar As Hanzade Kilickiran Staples Food & Staples Retailing OW 134.5 139 3.3%
41 CEEMEA ALMARAI ABAlmarai Co Taher Safieddine Staples Food Products N 53.2 53 (0.1% )
42 LatAm SLCE3 BZ Slc Agricola Sa Lucas Ferreira Staples Food Products OW 44.5 52 17.0%
44
(1-212) 622-3601 01 December 2022
Companies Discussed in This Report (all prices in this report as of market close on 30 November 2022)
AGC (5201)(5201.T/¥4600/OW), Aisin (7259)(7259.T/¥3765/N), Amorepacific Corp(090430.KS/W130500/UW), Asahi
Kasei (3407)(3407.T/¥1019/N), Daikin Industries (6367)(6367.T/¥22405/OW), FAST RETAILING
(9983)(9983.T/¥80810/N), FUJIFILM Holdings (4901)(4901.T/¥7315/OW), Fanuc (6954)(6954.T/¥20365/UW), Honda
Motor (7267)(7267.T/¥3356/N), Hotel Shilla(008770.KS/W73000/UW), Hyundai Steel Company(004020.KS/W33900/N),
ITOCHU Corporation (8001)(8001.T/¥4287/OW), JFE Holdings (5411)(5411.T/¥1526/OW), Keisei Electric Railway
(9009)(9009.T/¥3915/OW), Keyence (6861)(6861.T/¥57140/OW), Kobe Steel (5406)(5406.T/¥620/OW), LG
Display(034220.KS/W14450/N), LG H&H(051900.KS/W656000/OW), Mazda Motor (7261)(7261.T/¥1091/N), Mitsubishi
Motors (7211)(7211.T/¥636/N), Mitsui Chemicals (4183)(4183.T/¥3100/N), Murata Manufacturing
(6981)(6981.T/¥7464/N), Nippon Express Holdings (9147)(9147.T/¥8090/OW), Nippon Paint Holdings
(4612)(4612.T/¥1120/N), Nippon Steel (5401)(5401.T/¥2193/OW), Nissan Motor (7201)(7201.T/¥491/N), Nomura Co Ltd
(9716)(9716.T/¥1032/N), Olympus (7733)(7733.T/¥2806/OW), Orion(271560.KS/W117500/OW), POSCO Holdings
Inc(005490.KS/W299500/N), RYOHIN KEIKAKU (7453)(7453.T/¥1449/OW), Rengo Corp (3941)(3941.T/¥866/OW),
Rohm (6963)(6963.T/¥10850/OW), SK hynix(000660.KS/W85000/OW), SMC (6273)(6273.T/¥61760/OW), SUMCO
(3436)(3436.T/¥2023/N), Samsung Electronics(005930.KS/W62200/OW), Shiseido (4911)(4911.T/¥5799/OW), Taiheiyo
Cement (5233)(5233.T/¥2167/N), Toyota Motor (7203)(7203.T/¥2011/OW), YAKULT HONSHA
(2267)(2267.T/¥8750/N), Yaskawa Electric (6506)(6506.T/¥4445/N)
Analyst Certification: The Research Analyst(s) denoted by an “AC” on the cover of this report certifies (or, where multiple Research
Analysts are primarily responsible for this report, the Research Analyst denoted by an “AC” on the cover or within the document
individually certifies, with respect to each security or issuer that the Research Analyst covers in this research) that: (1) all of the views
expressed in this report accurately reflect the Research Analyst’s personal views about any and all of the subject securities or issuers; and
(2) no part of any of the Research Analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations
or views expressed by the Research Analyst(s) in this report. For all Korea-based Research Analysts listed on the front cover, if
applicable, they also certify, as per KOFIA requirements, that the Research Analyst’s analysis was made in good faith and that the views
reflect the Research Analyst’s own opinion, without undue influence or intervention.
All authors named within this report are Research Analysts who produce independent research unless otherwise specified. In Europe,
Sector Specialists (Sales and Trading) may be shown on this report as contacts but are not authors of the report or part of the Research
Department.
Pursuant to Brazilian regulation, the primary research analyst signing this report certifies that (1) all recommendations expressed herein
by the research analyst reflect the analyst’s sole and exclusive personal views and have been independently produced, including from the
J.P. Morgan entity in which the research analyst is an employee; and (2) the research analyst responsible for or any research analyst
involved in the preparation of this report will disclose herein any situation that impacts or that could impact the impartiality of the
recommendations contained in this report or that constitutes or may constitute a conflict of interest.
Important Disclosures
This report is a product of the research department's Global Quantitative and Derivatives Strategy group. Views expressed may differ
from the views of the research analysts covering stocks or sectors mentioned in this report. Structured securities, options, futures and
other derivatives are complex instruments, may involve a high degree of risk, and may be appropriate investments only for sophisticated
investors who are capable of understanding and assuming the risks involved. Because of the importance of tax considerations to many
option transactions, investors considering options should consult with their tax advisor as to how taxes affect the outcome of contemplated
option transactions.
 Market Maker/ Liquidity Provider: J.P. Morgan is a market maker and/or liquidity provider in the financial instruments of/related to
Nippon Paint Holdings (4612), JFE Holdings (5411), Nippon Steel (5401), Daikin Industries (6367), Yaskawa Electric (6506), Fanuc
(6954), ITOCHU Corporation (8001), Nomura Co Ltd (9716), Keisei Electric Railway (9009), Aisin (7259), Nissan Motor (7201),
RYOHIN KEIKAKU (7453), FAST RETAILING (9983), YAKULT HONSHA (2267), Shiseido (4911), Olympus (7733), Murata
Manufacturing (6981), Hyundai Steel Company, POSCO Holdings Inc, Hotel Shilla, Orion, Amorepacific Corp, LG H&H, LG Display,
Asahi Kasei (3407), Mitsui Chemicals (4183), Rengo Corp (3941), Kobe Steel (5406), SMC (6273), Nippon Express Holdings (9147),
Toyota Motor (7203), Honda Motor (7267), FUJIFILM Holdings (4901), Keyence (6861), Rohm (6963), Taiheiyo Cement (5233), AGC
(5201), Mitsubishi Motors (7211), Mazda Motor (7261), SUMCO (3436), Samsung Electronics, SK hynix.
 Manager or Co-manager: J.P. Morgan acted as manager or co-manager in a public offering of securities or financial instruments (as
such term is defined in Directive 2014/65/EU) of/for Olympus (7733), Honda Motor (7267), Samsung Electronics within the past 12
months.
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 Beneficial Ownership (1% or more): J.P. Morgan beneficially owns 1% or more of a class of common equity securities of ITOCHU
Corporation (8001), RYOHIN KEIKAKU (7453), Amorepacific Corp, Kobe Steel (5406), AGC (5201), SUMCO (3436).
 Client: J.P. Morgan currently has, or had within the past 12 months, the following entity(ies) as clients: Nippon Paint Holdings (4612),
JFE Holdings (5411), Nippon Steel (5401), Daikin Industries (6367), Yaskawa Electric (6506), Fanuc (6954), ITOCHU Corporation
(8001), Nomura Co Ltd (9716), Keisei Electric Railway (9009), Aisin (7259), Nissan Motor (7201), RYOHIN KEIKAKU (7453), FAST
RETAILING (9983), YAKULT HONSHA (2267), Shiseido (4911), Olympus (7733), Murata Manufacturing (6981), Hyundai Steel
Company, POSCO Holdings Inc, Hotel Shilla, Orion, Amorepacific Corp, LG H&H, LG Display, Asahi Kasei (3407), Mitsui Chemicals
(4183), Rengo Corp (3941), Kobe Steel (5406), SMC (6273), Nippon Express Holdings (9147), Toyota Motor (7203), Honda Motor
(7267), FUJIFILM Holdings (4901), Keyence (6861), Rohm (6963), Taiheiyo Cement (5233), AGC (5201), Mitsubishi Motors (7211),
Mazda Motor (7261), SUMCO (3436), Samsung Electronics, SK hynix.
 Client/Investment Banking: J.P. Morgan currently has, or had within the past 12 months, the following entity(ies) as investment
banking clients: ITOCHU Corporation (8001), Nissan Motor (7201), Olympus (7733), Toyota Motor (7203), Honda Motor (7267),
FUJIFILM Holdings (4901), Samsung Electronics.
 Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following
entity(ies) as clients, and the services provided were non-investment-banking, securities-related: Nippon Paint Holdings (4612), JFE
Holdings (5411), Nippon Steel (5401), Daikin Industries (6367), Yaskawa Electric (6506), Fanuc (6954), ITOCHU Corporation (8001),
Nomura Co Ltd (9716), Keisei Electric Railway (9009), Aisin (7259), Nissan Motor (7201), RYOHIN KEIKAKU (7453), FAST
RETAILING (9983), YAKULT HONSHA (2267), Shiseido (4911), Olympus (7733), Murata Manufacturing (6981), Hyundai Steel
Company, POSCO Holdings Inc, Hotel Shilla, Orion, Amorepacific Corp, LG H&H, LG Display, Asahi Kasei (3407), Mitsui Chemicals
(4183), Rengo Corp (3941), Kobe Steel (5406), SMC (6273), Nippon Express Holdings (9147), Toyota Motor (7203), Honda Motor
(7267), FUJIFILM Holdings (4901), Keyence (6861), Rohm (6963), Taiheiyo Cement (5233), AGC (5201), Mitsubishi Motors (7211),
Mazda Motor (7261), SUMCO (3436), Samsung Electronics, SK hynix.
 Client/Non-Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following entity(ies) as clients, and
the services provided were non-securities-related: JFE Holdings (5411), Nippon Steel (5401), Daikin Industries (6367), Fanuc (6954),
ITOCHU Corporation (8001), Aisin (7259), Nissan Motor (7201), FAST RETAILING (9983), Shiseido (4911), Murata Manufacturing
(6981), Hyundai Steel Company, POSCO Holdings Inc, Asahi Kasei (3407), Mitsui Chemicals (4183), Kobe Steel (5406), SMC (6273),
Toyota Motor (7203), Honda Motor (7267), FUJIFILM Holdings (4901), AGC (5201), Mitsubishi Motors (7211), Mazda Motor (7261),
Samsung Electronics.
 Investment Banking Compensation Received: J.P. Morgan has received in the past 12 months compensation for investment banking
services from ITOCHU Corporation (8001), Nissan Motor (7201), Olympus (7733), Toyota Motor (7203), Honda Motor (7267),
FUJIFILM Holdings (4901), Samsung Electronics.
 Potential Investment Banking Compensation: J.P. Morgan expects to receive, or intends to seek, compensation for investment
banking services in the next three months from ITOCHU Corporation (8001), Nissan Motor (7201), Olympus (7733), POSCO Holdings
Inc, Amorepacific Corp, Toyota Motor (7203), Honda Motor (7267), FUJIFILM Holdings (4901), Samsung Electronics, SK hynix.
 Non-Investment Banking Compensation Received: J.P. Morgan has received compensation in the past 12 months for products or
services other than investment banking from Nippon Paint Holdings (4612), JFE Holdings (5411), Nippon Steel (5401), Daikin Industries
(6367), Yaskawa Electric (6506), Fanuc (6954), ITOCHU Corporation (8001), Nomura Co Ltd (9716), Keisei Electric Railway (9009),
Aisin (7259), Nissan Motor (7201), RYOHIN KEIKAKU (7453), FAST RETAILING (9983), YAKULT HONSHA (2267), Shiseido
(4911), Olympus (7733), Murata Manufacturing (6981), Hyundai Steel Company, POSCO Holdings Inc, Hotel Shilla, Orion,
Amorepacific Corp, LG H&H, LG Display, Asahi Kasei (3407), Mitsui Chemicals (4183), Rengo Corp (3941), Kobe Steel (5406), SMC
(6273), Nippon Express Holdings (9147), Toyota Motor (7203), Honda Motor (7267), FUJIFILM Holdings (4901), Keyence (6861),
Rohm (6963), Taiheiyo Cement (5233), AGC (5201), Mitsubishi Motors (7211), Mazda Motor (7261), SUMCO (3436), Samsung
Electronics, SK hynix.
 Debt Position: J.P. Morgan may hold a position in the debt securities of Nippon Paint Holdings (4612), JFE Holdings (5411), Nippon
Steel (5401), Daikin Industries (6367), Yaskawa Electric (6506), Fanuc (6954), ITOCHU Corporation (8001), Nomura Co Ltd (9716),
Keisei Electric Railway (9009), Aisin (7259), Nissan Motor (7201), RYOHIN KEIKAKU (7453), FAST RETAILING (9983), YAKULT
HONSHA (2267), Shiseido (4911), Olympus (7733), Murata Manufacturing (6981), Hyundai Steel Company, POSCO Holdings Inc,
Hotel Shilla, Orion, Amorepacific Corp, LG H&H, LG Display, Asahi Kasei (3407), Mitsui Chemicals (4183), Rengo Corp (3941), Kobe
Steel (5406), SMC (6273), Nippon Express Holdings (9147), Toyota Motor (7203), Honda Motor (7267), FUJIFILM Holdings (4901),
Keyence (6861), Rohm (6963), Taiheiyo Cement (5233), AGC (5201), Mitsubishi Motors (7211), Mazda Motor (7261), SUMCO (3436),
Samsung Electronics, SK hynix, if any.
 MSCI: The MSCI sourced information is the exclusive property of MSCI. Without prior written permission of MSCI, this information
and any other MSCI intellectual property may not be reproduced, redisseminated or used to create any financial products, including any
indices. This information is provided on an 'as is' basis. The user assumes the entire risk of any use made of this information. MSCI, its
affiliates and any third party involved in, or related to, computing or compiling the information hereby expressly disclaim all warranties of
originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of this information. Without
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limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in, or related to, computing or
compiling the information have any liability for any damages of any kind. MSCI and the MSCI indexes are services marks of MSCI and
its affiliates.
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Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe:
J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the
average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Neutral [Over the next six to twelve
months, we expect this stock will perform in line with the average total return of the stocks in the analyst’s (or the analyst’s team’s)
coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of
the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if
applicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy
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recommendation or a rating. In our Asia (ex-Australia and ex-India) and U.K. small- and mid-cap equity research, each stock’s expected
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J.P. Morgan Equity Research Ratings Distribution, as of October 01, 2022

Overweight Neutral Underweight
(buy) (hold) (sell)
J.P. Morgan Global Equity Research Coverage* 50% 37% 13%
IB clients** 50% 46% 33%
JPMS Equity Research Coverage* 50% 38% 12%
IB clients** 70% 68% 50%
*Please note that the percentages might not add to 100% because of rounding.
**Percentage of subject companies within each of the "buy," "hold" and "sell" categories for which J.P. Morgan has provided investment banking
services within the previous 12 months.
For purposes only of FINRA ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold rating
category; and our Underweight rating falls into a sell rating category. Please note that stocks with an NR designation are not included in the table above.
This information is current as of the end of the most recent calendar quarter.
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2023 Global Equity Outlook

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2023 Global Equity Outlook

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Global Markets Strategy

Global Equity Strategy

UK £8,150 9% £676 -10%

Style Outlook — Inflation, subsequent restrictive CB policy and recession fears

 We are overweight Healthcare in US/Japan/SE Asia for its defensive growth

Index Price Targets, EPS Forecasts & Style / Sector Views

Source: J.P. Morgan Equity Macro Research

Regional Style Views

N - Consumer Staples is the biggeset

OW Small SMIDs: Industrials and IT are the

Source: J.P. Morgan Equity Macro Research

Regional Sector / Industry Views

Key Equity Themes for 2023

Global Thematic Baskets

We also constructed additional regional baskets for these global themes:

Global Theme BBG Ticker Regional Implementation Page

Nearshoring Beneficiaries JPUNEARS US Stocks that are likely Beneficiaries of Nearshoring 41

Regional Thematic Baskets

Figure 13: JPM Regional Thematic Baskets – SMid Cap Space

Figure 14: JPM Regional Thematic Baskets – Emerging Markets

Regional Equity Outlooks

Source: J.P. Morgan Equity Macro Research

Source: J.P. Morgan Equity Macro Research

Source: J.P. Morgan Equity Macro Research

US Earnings Outlook — 4Q22 corporate guidance to push 2023 EPS growth to

Cross-Regional / Europe Strategy Mislav Matejka, CFA AC

US Manufacturing PMI US 10Y bond yield (rhs)

0.80 160 150

Source: Datastream Source: Datastream

Source: IBES Source: Datastream

Source: IBES Source: Datastream

Japan Strategy Rie Nishihara AC (Japan)

BOJ policy change, a focus in 2023

Moderate rise during rebound phase post bottom in a recession

Risks and catalysts

Emerging Markets Strategy Pedro Martins Junior, CFA AC

J.P. Morgan EM Equity Strategy – Factors Driving Our Medium-Term Views

Bull Case (MSCI EM 1,190) Bear Case (MSCI EM 830)

China Strategy Wendy Liu AC (Asia/China)

Bull case at 12x FTM P/E on consensus estimate

Bear case at 8x FTM P/E on consensus estimate

Sector & style recommendation

Source: MSCI, Refinitiv Eikon, J.P. Morgan estimates

Real estate's value-added

Source: Wind, J.P. Morgan

Figure 32: MSCI-China FTM P/E changes driven by macro events

Asia Strategy Wendy Liu AC (Asia/China)

Index level 592 630 700 530

Implied upside/downside vs. Current level 6% 18% -11%

JPM 2022 EPS estimate (USD) and growth 46 -13%

JPM 2023 EPS estimate (USD) and growth 46 0%

JPM 2024 EPS estimate (USD) and growth 50 9%

Fwd P/E now and at end-2023 11.8 12.6 14.0 10.6

vs post-GFC average -0.3x sd +0.1x sd +1x sd -1.1x sd

Figure 39: Asia earnings downgrade cycle comparison

Healthcare, Energy, Low Vol / Quality over

Trade war, China

US growth downgrade, EU Materials, Cap Goods, Low Vol / Quality over

SouthEast Asia Strategy

2015 2016 2017 2018 2019 2020

Australia Strategy Jason Steed AC

J.P. Morgan Securities Australia Limited

forecasting one more 25bp hike before an extended pause at 3.10%.

Earnings outlook and index target