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.
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.