For the latest ETF industry news, please refer to our “Asia ETF Roundup (Industry) – February 2020”.
Major Markets Performance
As fears surrounding the COVID-19 outbreak have spread across the globe, major markets have been in turmoil. The S&P 500 had notched new highs during the month before nosediving at month end. The index finished the month with an 8.4% loss. Japan’s Nikkei 225 and Korea’s KOSPI fell 8.9% and 6.2%, respectively, as the outbreak worsened in those countries. China onshore markets, on the other hand, saw relatively small losses for the month (CSI 300 -1.6%; Shanghai Composite -3.2%) after trading resumed on 3 February following an extended Chinese New Year Holiday. Emerging markets generally recorded hefty losses, ranging from 6% to 13%.
The U.S. dollar appreciated in February, rising 0.8% (as measured by the ICE Spot Index). Asian currencies generally depreciated against the greenback. The Chinese Yuan slipped 0.9% against the U.S. dollar.
Precious metals’ prices had a strong run through most of February before losing steam. Gold closed the month with a 1.6% gain while platinum and silver prices dropped 9.2% and 3.9%, respectively.
Economic and Market News
EM Markets Rate Cuts: Thailand, Brazil, Philippines, Russia, China, Indonesia
- Thailand Cuts Rates by 25bps – On 5 February, the Bank of Thailand decided to cut its policy rate by 25bps to a record low of 1.0%. The Bank last cut rates by 25bps in November 2019.
- Brazil Cuts Rates by 25bps - On 5 February, the Central Bank of Brazil decided to cut its benchmark interest rate by 25bps to a record low of 4.25%. The Bank last cut rates by 50bps in December 2019.
- Philippines Cuts Rates by 25bps
- – On 6 February, the Philippines central bank decided to cut its overnight interest rates by 25bps to 3.75%. The Bank last cut rates by 25bps in September 2019.
- Russia Cuts Rates by 25bps – On 6 February, the Russia central bank decided to cut its key rate by 25bps to 6.0%. The bank last cut rates by 25bps in December 2019.
- China Cuts Rates by 10bps – On 20 February, the People’s Bank of China decided to cut the one-year loan prime rate by 10bps to 4.05%. The PBOC last cut its benchmark rates by 5bps in November 2019.
- Indonesia Cuts Rates by 25bps – On 20 February, the central bank of Indonesia decided to cut its BI 7-day reverse repo rate by 25bps to 4.0%.
China Economic Data: Inflation Climbs to 5.4% in January; Caixin/Markit PMI and Official PMI Both Plunged to Record Low
- China’s inflation rate increased further to 5.4% in January, up from a reading of 4.5% in December 2019. Food prices alone jumped 4.4% month-on-month. Surging pork prices remain a key contributor, spiking 116% higher as compared to a year ago.
- China’s Caixin/Markit PMI fell to a record low of 40.3 in February. January’s reading was 51.1. Meanwhile, the official PMI plunged to a record-low at 35.7 in February 2020. The January reading was 50.0. The previous low was recorded in November 2008 at 38.8.