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Asia ETF Roundup (Market) – April 2017

The U.S. Federal Reserve kept rates on hold in May. China’s 1Q GDP growth clocked in at 6.9%

Jackie Choy 11/05/17

For the latest ETF industry news, please refer to our “Asia ETF Roundup (Industry) – April 2017”.

Major Markets Performance
Global equity markets saw another month of mixed performance. The S&P 500 rose 0.9%, finishing just shy of new all-time highs. The FTSE 100 fell 1.6%, as U.K. Prime Minister Theresa May called for a snap general election to be held in June. The British pound jumped to a 6-month high after the announcement. Korea’s KOSPI rose 2.1% after North Korea’s missile test failed. Meanwhile, the Chinese equity markets weakened (HSCEI -0.5%; CSI 300 -0.5%; Shanghai Composite -2.1%). Emerging- and frontier-markets’ monthly performances were mostly positive. Stocks in India, Indonesia, Malaysia Pakistan and the Philippines gained between 1% and 6% (all measured by the relevant MSCI indices in USD terms).

The ICE USD Spot Index fell 1.3% in April. The Euro and the British pound gained against the U.S. dollar, climbing 1.8% and 3.5%, respectively, versus the greenback. Asian currencies’ performance against the U.S.  dollar was mixed ranging between +/-2%.

Precious metals’ prices also had mixed performances in April, despite the depreciation of the U.S. dollar. Gold and platinum prices rose 1.7% and 0.6% respectively, while prices for silver dropped by 3.6%.

Economic and Market News

The U.S. Federal Reserve Kept Rates Unchanged in May; Brazil and Russia Cut Rates

  • U.S. Kept Rates Unchanged – On 3 May 2017, the Fed’s FOMC decided to keep the federal funds rate unchanged at a target range between 0.75% and 1%. The Fed’s statement indicated that “The Committee views the slowing in growth during the first quarter as likely to be transitory and continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace”.
  • Brazil Cuts Rates by 100bps – On 12 April 2017, the central bank of Brazil decided to reduce the Selic rate by 100 basis points to 11.25%. This is the third rate cut this year.
  • Russia Cuts Rates by 50bps – On 28 April 2017, the central bank of Russia decided to reduce its key rate by 50bps to 9.25%. This is the second rate cut this year, following a 25bps cut in March 2017.

 

 

Chinese Economic Data: China 2017 1Q GDP Growth at 6.9%; Inflation at 0.9% in March; Caixin/Markit PMI Slides to 50.3, Official PMI Slides to 51.2

  • China achieved 2017 1Q GDP growth of 6.9%. Recall that the Chinese government set a GDP growth target for 2017 of “around 6.5%”.
  • Inflation in China remains under wraps. The March reading of 0.9% was little changed from February’s reading of 0.8%.
  • China’s official PMI reading for April registered at 51.2. This compares to March’s reading of 51.8. Meanwhile, the Caixin/Markit Purchasing Managers' Index fell more sharply than the official PMI, which registered at 50.3 in April, much lower than March’s level of 51.2. 
About Author Jackie Choy

Jackie Choy  

is the director of ETF Research for Morningstar Investment Management Asia