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Asia ETF Roundup (Market) –March 2018

Brazil, Russia, South Africa cut rates; U.S., Hong Kong hike rates; China 2018 GDP growth target at “around 6.5%”

Jackie Choy, CFA 12/04/18

For the latest ETF industry news, please refer to our “Asia ETF Roundup (Industry) – March 2018”.

Major Markets Performance
Concerns over an all-out trade war between the U.S. and China escalated even further in the month of April, as a series of tariffs was announced by the two countries. As tensions flared, major equity markets around the world generally retreated. Meanwhile, the performance of the emerging- and frontier-markets was mixed. The Vietnamese market continued its upward momentum, rising another 6.8% during March. This put Vietnamese stocks’ year-to-date gain at 17.6%. Meanwhile, the Indonesian and the Philippines markets fell 7.4% and 6.3%, respectively (all figures proxied by the respective MSCI country indexes in U.S. dollar terms).

The U.S dollar declined 0.5% in March, as measured by the ICE spot Index, and depreciated against many Asian currencies. During the month, the Korea Won experienced a gain of 1.6% against the U.S. dollar. Meanwhile, the Chinese Yuan registered a 0.6% uptick versus the greenback during March, putting its year-to-date increase at 3.5%.

Precious metals’ performance was mixed by month’s end. The price of gold price increased 0.5% for the month, while platinum and silver prices declined by 4.4% and 1.0%, respectively. 

Economic and Market News

Brazil, Russia, South Africa Cut Rates; U.S., Hong Kong Raise Rates

  • Brazil Cuts Rates by 25 bps- During the month, the Brazilian central bank cut rates for the 12th consecutive time. The bank reduced rates by 25 bps to 6.50%, marking a historically low level for the country’s benchmark interest rate.
  • U.S. Raised Rates by 25 bps- On March 21, the Fed announced that it would raise its target rate by 25 bps to 1.50%-1.75%. The Fed stated that the rate cut was in response to the strengthening economic activity and labor markets in recent months.
  • Hong Kong Raised Rates by 25 bps- On March 22, the Hong Kong Monetary Authority raised rates by 25 bps to 2.0% in response to the Fed’s interest rate hike.
  • Russia Cuts Rates by 25 bps- The Bank of Russia cut rates by 25 bps to 7.25%, stating that “inflation remains below 4% longer than expected, allowing for a quicker transition to neutral monetary policy this year”.
  • South Africa Cuts Rates by 25 bps- South Africa’s central bank cut rates by 25 bps to 6.5%, stating that “there was some room to provide further accommodation without undermining the inflation trajectory”.


Chinese Economic Data: China’s 2018 GDP Growth Target Set at “Around 6.5%”; Inflationat 2.9% in February; Official PMI Rose to 51.5 in March; Caixin/Markit PMI Falls to 51.0 in March

  • China set its GDP growth target for 2018 at “around 6.5%”, level with the target set for 2017. Note that GDP growth measured 6.9% in 2017.
  • China’s inflation rate registered at 2.9% in February, up from January’s reading of 1.5%.
  • China’s official PMI reading rebounded for March, registering at 51.5. This compares to February’s reading of 50.3. Meanwhile, the Caixin/Markit PMI for March fell to 51.0, lower than February’s reading of 51.6.
About Author Jackie Choy, CFA

Jackie Choy, CFA  

Jackie Choy, CFA is the Director of ETF Research for Morningstar Investment Management Asia