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Asia ETF Roundup (Market) – March 2019

China’s 2019 GDP growth target set at “6 to 6.5%”.

Jackie Choy, CFA 04/04/19

For the latest ETF industry news, please refer to our “Asia ETF Roundup (Industry) – March 2019”.

Major Markets Performance

Major markets rallied in the face of Brexit drama and the inversion of the U.S. treasury yield curve in March. The S&P 500 and FTSE 100 rose 1.8% and 2.9%, respectively. Onshore China equity markets’ performance remained strong, as markets rose around 5%, carrying over the momentum from the previous month. The latest leg was likely in response to the U.S. delaying a series of tariffs on Chinese goods that was scheduled to begin on 1 March. Emerging markets’ performance was mixed. Stocks in India performed strongly, rising 9.1%, while stocks in Brazil, Malaysia and Pakistan dropped by 3% to 4% (as measured by their respective MSCI indices in U.S. dollar terms).

Closing the first quarter of 2019, equity markets generally performed well. Most notably, the onshore Chinese markets rallied around 25% while the S&P 500 rose 13.1%.

The U.S. dollar appreciated 1.2% (as measured by the ICE Spot Index) in March. Meanwhile, Asian currencies generally depreciated against the greenback. The Chinese Yuan dropped slightly against the U.S. dollar in March, depreciating by 0.5%, putting its first quarter gains versus the U.S. dollar at 2.2%. On the other hand, the Indian Rupee appreciated 2.7% against the U.S. dollar in March, which coincided with strong stock market performance.

Precious metals’ performance was down in March. Silver prices dropped the most, falling 4.5%, followed by 2.4% and 1.8% declines in platinum and gold prices, respectively.

Economic and Market News

EU and U.S. Keeps Rates on Hold

  • EU Keeps Rates on Hold – The European Central Bank (ECB) decided on 7 March 2019 to keep its key rates on hold. The ECB stated that it will keep rates unchanged at least until the end of 2019.
  • U.S. Keeps Rates on Hold – The Federal Reserve decided on 20 March 2019 to keep its key rates on hold. The Fed stated that “in light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.”.

 

China Economic Data: GDP Growth Target Set at “6% to 6.5%”; Inflation Eased Further to 1.5% in February; Caixin/Markit PMI Rebounded to 50.8 in March,Official PMI Rose to 50.5

  • China’s GDP growth target for 2019 is set at a range of ”6% to 6.5%”. This was lowered from the target of “around 6.5%” set for 2018. Recall that China achieved GDP growth of 6.6% in 2018.
  • China’s inflation rate eased further to 1.5% for February from January’s reading of 1.7%. This was the lowest inflation rate since January last year.
  • Both China’s official PMI and the Caixin/Markit PMI rebounded above the 50-point level. The official PMI rebounded to 50.5 in March from February’s reading of 49.2. Meanwhile, the Caixin/Markit PMI rose to 50.8 in March, compared to February’s reading of 49.9.
About Author Jackie Choy, CFA

Jackie Choy, CFA  

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