Using PMI Data for Asia Sector Equity Investments

This document is a technical report that discusses the application of Asia Sector PMI data in guiding equity market investment decisions. It outlines how signals derived from PMI data can be utilized to enhance portfolio performance across various sectors. The report extends previous studies that demonstrated the effectiveness of PMI data at both country and global sector levels, now focusing specifically on Asia sectors. The methodology includes the construction of an Asia Sector PMI Growth Index, which is benchmarked against the S&P Pan Asia BMI Index. The findings indicate that utilizing PMI data can lead to significant excess returns, with historical backtesting showing returns as high as 332% over a 15-year period. The report also details the advantages of using PMI data, such as its availability, comparability, and timeliness, which are crucial for making informed investment decisions. Overall, the paper illustrates the potential of PMI data in optimizing sector-level investment strategies.