China Quant Strategy: Expensive leadership is starting to look fragile; hedge with low vol, high quality yielders

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China Quant Strategy: Expensive leadership is starting to look fragile; hedge with low vol, high quality yielders

J P M O R G A N Global Markets Strategy

12 July 2026

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China Quant Strategy

Expensive leadership is starting to look fragile; hedge

with low vol, high quality yielders

Our call favoring Growth over Value has worked well so far with Growth APAC Quantitative Strategy

ACoutperforming Value by 4.5% since June 15th. June’s style tape was consistent Evan Hu

with that view: Momentum and Growth rose 9.8% and 7.4%, respectively, while (852) 2800-8508

Value fell 7.5%. However, the market was again rewarding a narrow and evan.hu@jpmorgan.com

increasingly expensive right tail while the broader universe was under pressure: J.P.MorganMorganBrokingSecurities(Hong (AsiaKong)Pacific)LimitedLimited/ J.P.

MSCI China declined 7.1% in June and 73% of stocks moved lower with the AC Robert Smith, PhD

market. (61-2) 9003-8808

robert.z.smith@jpmorgan.com

Valuation spreads suggest that the market was still paying up for winners even as J.P. Morgan Securities Australia Limited

the average stock remained weak, as the gap between Expensive and Cheap stocks Arpan Singh

widened in June. The Expensive group now trades at more than 6x the multiple (91-22) 6157-3301

of the Cheap group, with median P/E of 114.9x and 6.3x, respectively. Valuations arpan.singh@jpmchase.com

J.P. Morgan India Private Limited

of the winners are starting to look stretched.

Chris Chi

chris.chi@jpmorgan.com