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Asia ETF Roundup (Market) – November 2019

Rate cuts in Thailand and China

Jackie Choy, CFA 05/12/19

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

Major Markets Performance

November was filled with news on U.S.-China trade talks and related geopolitical matters. Towards the end of the month, it was reported that a preliminary trade deal was “millimetres away”. The S&P 500 index rose 3.4% in the month of November, notching fresh new highs. The Chinese equity markets retreated (HSCEI -2.2%; CSI 300 -1.5%; Shanghai Composite -1.9%). Emerging markets’ performances were mixed in November. The Pakistani equity market rose strongly, gaining 10.9%. Equities in Brazil, Indonesia and the Philippines dropped 3% to 5% (as measured by their respective MSCI indices in U.S. dollar terms).

The U.S. dollar appreciated in November, rising 0.9% (as measured by the ICE Spot Index). Thailand and China cut rates by 25bps and 5bps, respectively. Asian currencies generally depreciated against the greenback. The Chinese Yuan was little changed against the U.S. dollar, rising 0.1%. Year-to-date, the Chinese Yuan has depreciated 2.3% against the U.S. dollar.

Precious metals’ prices dropped in the month of November. Gold, silver and platinum prices dropped 3%-6%.

Economic and Market News

Thailand and China Cut Rates

  • Thailand Cuts Rates by 25bps – TheBank of Thailand decided on 6 November 2019 to cut its policy rate by 25bps to 1.50%. This is the second time the Bank cut rates this year. The Bank last cut rates by 25bps in August 2019.
  • China Cut Rates by 5bps – The People’s Bank of China decided on 20 November 2019 to cut its loan prime rate by 5bps to 4.15% on one-year LPR. The PBoC last reduced LPR in September, also with a magnitude of 5bps.

 

China Economic Data: Inflation Soar to 3.8% in October; Caixin/Markit PMI rose to 51.8, Official PMI rose to 50.2 in November

  • China’s inflation rate rose to 3.8% in October, up from September’s reading of 3.0%. This marks the highest level in nearly eight years. Pork prices more than doubled in October compared to a year ago. 
  • China’s Caixin/Markit PMI rose slightly to 51.8 in November, reaching the highest level since December 2016. This compares to October’s reading of 51.7. The official PMI rose to 50.2 in November, up from October’s reading of 49.3.
About Author Jackie Choy, CFA

Jackie Choy, CFA  

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