Korea and Japan Through a HOLT Lens (October 2026)

This report applies the UBS HOLT framework to Korean and Japanese equities. Korea's outperformance over the past two years has been underpinned by improving CFROI and robust earnings sentiment, with a majority of stocks receiving earnings upgrades for 14 consecutive months, one of the longest streaks in three decades; after the recent correction, Korea's (ex. Samsung, Hynix) HOLT price-to-book stands at 1.0x, below the 2026 peak of 1.3x and above the long-term median of 0.9x. In Japan, the broad small/mid-cap group exhibits persistently negative Economic Profit, yet dispersion within the group is substantial: SMIDs trade at the widest discount to large caps on HOLT Market Implied Yield (MIY), with positive-EP firms at 4.0% versus 5.4% for value destroyers, so the opportunity lies in identifying companies able to sustain and compound Economic Profit at reasonable valuations. The report also presents idea screens for Korea (expensive momentum leaders;