UBS downgrades Japan to underweight from overweight. The brokerage thinks that a third wave of quantitative easing by the Federal Reserve will frustrate efforts to weaken the yen, "a clear negative for corporate Japan". Furthermore, UBS notes that domestic macro data has been deteriorating as cyclical support from reconstruction spending fades. The brokerage is also underweight Europe, excluding the UK. Says Europe ex-UK has rallied on the ECB's latest policy announcements but earnings have also fallen leading to multiple re-rating.
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