•

•

•

•

•

•

12

1.9%

-10.5%

11.8%

2.5% 2.0% 1.0% 1.1% 1.4% 1.4%

-15%

-10%

-5%

0%

5%

10%

15%

0.6%

-1.3%

-9.0%

7.4%

0.6% 0.5% 0.5% 0.4% 0.4%

-10%

-5%

0%

5%

10%

0.1%

-3.7%

-11.8%

11.8%

0.9% 1.1% 0.9% 0.6% 0.5%

-20%

-10%

0%

10%

20%

Real GDP growthQuarter-over-quarter change

Source: J.P. Morgan Economic Research, J.P. Morgan Asset Management. Guide to the Markets – Asia. Data reflect most recently available as of 30/09/20.

China Eurozone

U.S.

Forecast

ForecastReal GDP levelsIndexed to 1Q 2006 = 100

Japan

40

100

160

220

280

340

400

90

100

110

120

130

140

150

'06 '08 '10 '12 '14 '16 '18 '20

-1.8%-0.6%

-7.9%

2.6% 3.1%

0.7% 0.7% 0.2% 0.2%

-10%

-5%

0%

5%

4Q '19 1Q '20 2Q '20 3Q '20 4Q '20 1Q '21 2Q '21 3Q '21 4Q '21

China

Eurozone

U.S.

Japan

•

•

•

•

18

-5

-4

-3

-2

-1

0

1

2

3

4

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '210

2

4

6

8

10

12

14

16

18

20

22

24

26

-2

0

2

4

6

8

10

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21

Source: Bank of England, Bank of Japan, Bloomberg, European Central Bank, J.P. Morgan Securities Research, UK debt management office, U.S. Federal Reserve, J.P. Morgan Asset Management. (Right) FactSet. *G4 is the eurozone, Japan, UK and the U.S. 2020 and 2021 estimates are from J.P. Morgan Asset Management’s Global Fixed Income, Currency and Commodities team. **Forecasts are based on implied monetary policy settings. Guide to the Markets – Asia. Data reflect most recently available as of 30/09/20.

G4 bank purchases and government issuance*USD trillions

G4 central bank balance sheetsUSD trillions

Net issuance – U.S.

Net purchase – G4 ex-U.S.

Net issuance – G4 ex-U.S.

Net purchase – U.S.

Net supply after QE

12-month change

in balance sheetCentral bank

balance sheet

Forecast**

•

•

•

•

24

Source: 2020 Democratic Party Platform, Donald Trump campaign website, J.P. Morgan Asset Management.Based on current conditions subject to change from time to time. Provided solely to illustrate general trend. Guide to the Markets – Asia. Data reflect most recently available as of 30/09/20.

Presidential candidates’ campaign platformComparison of anticipated changes

Issues Trump Biden

Taxes • Tax cuts to boost take-home pay

• Tax credits for “Made in America”

• Reverse 2017 tax cuts & raise taxes on corporate income,

high income individuals and capital gains

• Expand tax credits to support domestic manufacturing

• More tax credits to low-middle-income families

China • Reduce reliance on China

• Promote companies to relocate back to the U.S. from

China

• Reinforce intellectual property rights protection, trade

practices

• Cooperation on issues of mutual interest (climate change)

• Not resorting to unilateral trade tariff

Infrastructure • High-speed internet network

• Clean drinking water and clean air

• High-speed internet network

• Clean drinking water

• Clean energy

• Upgrade ports and freights

Energy • Promote energy independence • Reduce emissions

• Green energy

Regulations • Deregulation for energy independence • Strengthen regulations on financial services, technology and

energy

Foreign Policy • “America First” • “Revitalizing American Diplomacy”

Health care • Cut prescription drug prices

• Reduce insurance premium

• Universal health care (Affordable Care Act)

• Cut prescription drug prices

• Reduce insurance premium

•

•

•

•

•

•

•

•

•

•

42

S&P 500 earnings and performanceNext 12 months’ earnings per share estimates Index level

Source: FactSet, Standard & Poor’s, J.P. Morgan Asset Management.Guide to the Markets – Asia. Data reflect most recently available as of 30/09/20.

S&P 500 performance contributionPrice return since 23 March low

Next 12 months’

EPS estimatesIndex levelS&P 500 forward EPS S&P 500 index level

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55%

Info Tech

Cons. Disc

Health Care

Telecoms

Industrials

Financials

Cons.Staples

Materials

Real Estate

Utilities

Energy

Total

•

•

•

•

50

Source: Barclays, Bloomberg Finance L.P., FactSet, ICE BofA Merrill Lynch, J.P. Morgan Economics Research, MSCI, J.P. Morgan Asset Management. Based on Bloomberg Barclays U.S. Treasury (UST) Bellwether 2y & 10y (2y & 10y UST), Bloomberg Barclays Treasury Inflation-Protected Securities (TIPS), ICE BofAML Country Government (1-10y) (France, Germany, Japan & UK (1-10y)), Bloomberg Barclays U.S. Aggregate, Credit – Investment Grade & High Yield (U.S. Aggregate, IG & HY), Bloomberg Barclays U.S. Floating Rate (U.S. Floating Rate), Bloomberg Barclays U.S. Aggregate Securitized – Mortgage-Backed Securities (U.S. MBS), Bloomberg Barclays Pan-European High Yield (Europe HY), J.P. Morgan GBI-EM Global (Local EMD), J.P. Morgan EMBI Global (USD EMD), J.P. Morgan Asia Credit (JACI) (USD Asia Credit), J.P. Morgan Asia Credit (JACI) – High Yield (USD Asia HY), J.P. Morgan Asia Credit China Index (USD China offshore credit), J.P. Morgan CEMBI (USD EMD corporates), J.P. Morgan Asia Diversified (JADE) (Local Asia). *Correlations are based on 10-years of monthly returns. Guide to the Markets – Asia. Data reflect most recently available as of 30/09/20.

Yields and correlations of fixed income returns to equities Yield, 10-year correlation between monthly total returns

Government

Credit

Emerging Market

Higher yielding

sectors

Stronger correlation

to equities

Government & Credit

2y UST

10y UST TIPS

Japan (1-10y)

Germany (1-10y)

France (1-10y)

UK (1-10y)

U.S. Aggregate

U.S. IG

U.S. HY

U.S. Floating RateU.S. MBS

Europe HY

Local EMDUSD EMD

USD Asia Credit

USD Asia HY

USD EMD corporates

Local Asia USD China offshore credit

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

-0.6 -0.5 -0.4 -0.3 -0.2 -0.1 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9

Yie

ld t

o m

atu

rity

(12

-mo

nth

av

era

ge)

Correlation to MSCI AC World*

•

•

•

•

60

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

60

70

80

90

100

110

120

130

140

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Source: FactSet, OECD, Tullet Prebon, WM/Reuters, J.P. Morgan Asset Management. *The U.S. dollar index shown here is a nominal trade-weighted index of major trading partners’ currencies. Major currencies are the British pound, Canadian dollar, euro, Japanese yen, Swedish kroner and Swiss franc. **DM is developed markets and the yield is calculated as a GDP-weighted average of the 10-year government bond yields of Australia, Canada, France, Germany, Italy, Japan, Switzerland and the UK.Past performance is not a reliable indicator of current and future results.Guide to the Markets – Asia. Data reflect most recently available as of 30/09/20.

U.S. dollar and interest rate differentialIndex Yield spread

Recessions

U.S. minus DM 10-year

government bond yield**U.S. dollar index* •

•

•

•

•

•

•

•

•

•

4

EM Asia ex-China* manufacturing PMI and real GDP growthIndex Year-over-year change

EM Asia ex-China* investment and exportsYear-over-year change, 3-month moving average

Source: IHS Markit, J.P. Morgan Economic Research, National Statistics Agencies, J.P. Morgan Asset Management; (Right) Netherlands Bureau of Policy Analysis. PMI = Purchasing Managers’ Index. Manufacturing PMIs are relative to 50, which indicates contraction (below 50) or expansion (above 50) of the manufacturing sector. *Emerging Market (EM) Asia ex-China includes Hong Kong, India, Indonesia, Korea, Malaysia, Philippines, Singapore, Taiwan and Thailand. Guide to the Markets – Asia. Data reflect most recently available as of 30/09/20.

Nominal investment

Export volumes

Manufacturing PMI GDP growth

-30%

-20%

-10%

0%

10%

20%

30%

'01 '03 '05 '07 '09 '11 '13 '15 '17 '19-12%

-8%

-4%

0%

4%

8%

12%

35

40

45

50

55

60

65

'04 '06 '08 '10 '12 '14 '16 '18 '20

•

•

•

•

33

1%

-2% -1%

-2%

-19%

-9%

-6%

-33%

26%

32%

24%

40%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

U.S. EM Asia Pacific ex-Japan

Europe

Earnings growthEarnings per share, year-over-year change, consensus estimates

Source: IBES, MSCI, Standard & Poor’s, Thomson Reuters Datastream, J.P. Morgan Asset Management. Asia Pacific ex-Japan, emerging markets (EM), Europe and U.S. equity indices used are the MSCI Asia Pacific ex-Japan, MSCI Emerging Markets, MSCI Europe and S&P 500, respectively. Consensus estimates used are calendar year estimates from IBES. Revisions are based on the current unreported year. Net earnings revisions is (number of companies with upward earnings revisions – number of companies with downward earnings revisions) / number of total companies. Past performance is not a reliable indicator of current and future results. Guide to the Markets – Asia. Data reflect most recently available as of 30/09/20.

Earnings revisions ratiosNet earnings revisions to consensus estimates, 13-week moving average

U.S.

Europe

Asia Pacific

ex-Japan

Japan

-80%

-60%

-40%

-20%

0%

20%

40%

60%

'14 '15 '16 '17 '18 '19 '20

20212019 2020

•

•

•

38

Source: MSCI, J.P. Morgan Asset Management. (Top) IBES. Equity indices used are the respective MSCI indices. Consensus estimates used are calendar year estimates from IBES. (Bottom) FactSet. Sector indices used are from the MSCI AC Asia Pacific ex-Japan Index. Consensus estimates used are calendar year estimates from FactSet. Past performance is not a reliable indicator of current and future results. Guide to the Markets – Asia. Data reflect most recently available as of 30/09/20.

Earnings growth by sectorEarnings per share, year-over-year change, consensus estimates

Earnings growth by marketEarnings per share, year-over-year change, consensus estimates 2020 2021

2020 2021

14.7%

10.0%

-13.7% -10.6%

11.1%

-3.3%

32.2%

10.4%

-27.4%-20.4%

-50.4%

10.5%12.8% 14.2% 16.8% 17.0% 17.9% 24.3% 24.7%

39.1%

62.9% 63.9%

-60%

-40%

-20%

0%

20%

40%

60%

80%

Utilities Consumerstaples

Financials Real estate Communicationservices

Materials Informationtechnology

Health care Industrials Consumerdiscretionary

Energy

11.4%

0.3%

-6.2%

-37.0% -33.8%-26.6% -27.0%

-34.4%

17.3%

-10.2%

14.2%19.5%

24.2%31.8% 32.1% 32.3% 34.8% 38.3% 42.0% 42.7%

-50%

-25%

0%

25%

50%

Taiwan China Asia Pacific ex-Japan

Thailand Singapore Indonesia Hong Kong Philippines Korea India

•

•

•

•

•

•

•

•

•

7

25

30

35

40

45

50

55

60

65

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Contribution to real GDP growthYear-over-year change

Caixin/Markit Purchasing Managers’ IndicesLevel

Source: J.P. Morgan Asset Management; (Left) CEIC, National Bureau of Statistics of China; (Right) Caixin/Markit, J.P. Morgan Economic Research.*Purchasing Managers’ Index (PMI) is relative to 50, which indicates deceleration (below 50) or acceleration (above 50) of economic activities in the sector.Guide to the Markets – Asia. Data reflect most recently available as of 30/09/20.

Net exports

Gross capital formation (investment)

Consumption

GDP

Manufacturing

Services

08/2020: 54.0

1H2020: -1.6%

09/2020: 53.0

-8%

-4%

0%

4%

8%

12%

16%

20%

'80 '85 '90 '95 '00 '05 '10 '15 '20

•

•

•

•

•

10

0.0%

1.5%

3.0%

4.5%

6.0%

7.5%

'15 '16 '17 '18 '19 '20

Key interest ratesPer annum

Source: CEIC, People’s Bank of China, J.P. Morgan Asset Management; (Left) Ministry of Finance of China; (Right) National Interbank Funding Center.*Credit impulse measures the year-over-year change of credit flow (net aggregate social financing) as a percentage of nominal GDP. Rolling 12-month nominal GDPand credit stock are used in the calculation. **In August 2019, the PBoC started to release 1-year and 5-year loan prime rates (LPR) on a monthly basis, which arebased on quotes from 18 large banks. LPR has become the benchmark for commercial loans and floating rate loan contracts.Guide to the Markets – Asia. Data reflect most recently available as of 30/09/20.

Interbank repo (7-day)

Medium-term lending

facility (1-year)

Deposit rate (1-year)

Loan prime

rate (1-year)**

Chinese credit impulse and global new orders% of nominal GDP, year-over-year change Difference from one year ago

Credit impulse* (advanced 6 months)

Global composite PMI - New orders

Lending rate (1-year)

-30

-25

-20

-15

-10

-5

0

5

10

15

20

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

•

•

•

•

•

57

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

CentralGov.

Policy &Development

Banks

LocalGov.

Banks Other***Industrials OtherFinancials

RealEstate

Source: J.P. Morgan Asset Management; (Top left) FTSE Russell, J.P. Morgan Economics Research, National Interbank Funding Center; (Right and bottom left) Bloomberg Finance L.P. *Credit indices shown are yield-to-worst, government bond index shown displays yield-to-maturity. FTSE Dim Sum Bond Index (CNH China offshore credit), J.P. Morgan Asia Credit China Index (USD China offshore credit). **Bond market outstanding refers to the total U.S. dollar value of bonds (corporate and government) in the market and does not reflect mandatory prepayment. ***Other includes: Communications, Consumer Discretionary, Consumer Staples, Energy, Health Care, Materials, Technology, Utilities. ****Risk-adjusted return is annualized returns from 31/12/2004 to 30/09/2020, correlation data uses returns over the same period.Guide to the Markets – Asia. Data reflect most recently available as of 30/09/20.

Onshore bond market outstanding** by issuer sectorUSD billions

Bond yields*% per annum

3-year China

Government Bond Index

USD China

offshore creditCNH China offshore credit

Eligible for

benchmark

inclusion

Risk-adjusted return and correlation****

Benchmark Index

Developed Market

Emerging Market

0%

2%

4%

6%

8%

10%

12%

'11 '13 '15 '17 '19

India

Indonesia

Malaysia

Thailand

Mexico

South Africa

China onshore

Australia

France

GermanyItaly

Japan

UK

Global AggS&P 500

China A-Share

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

0.0 0.2 0.4 0.6 0.8 1.0

Ris

k-a

dju

ste

d r

etu

rn

Correlation to Global Agg

•

•

•

•

•

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