Asia ETF Roundup (Market) – June 2022

U.S. hikes rates by 75bps.

Jackie Choy, CFA 13 July, 2022 | 9:47
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For the latest ETF industry news, please refer to our “Asia ETF Roundup (Industry) – June 2022”.

Major Markets Performance

In June, the U.S. Fed hiked rates by 75bps, the biggest increase since 1994. The Morningstar Global Markets, Developed Markets and Emerging markets plunged 7-9%. Most Asian markets also suffered losses. In particular, the Korean and Taiwanese equity markets plummeted 17.3% and 13.2%, respectively (proxied by their respective Morningstar indexes in U.S. dollar terms). However, the Chinese equity market was an exception. The Morningstar China Index rose 5.7% in the month.

In the first half of 2022, the Morningstar Global Markets, Developed Markets and Emerging markets suffered losses of 17-20%, which largely wiped out the gains attained in the entire 2021 (for example, the Morningstar Developed Markets Index gained 21.1% in 2021). The Morningstar China Index recorded a smaller loss at 10.6%, but this followed a 21.1% dip in 2021.

The U.S. dollar appreciated strongly by 2.9% in June as proxied by the ICE USD Spot rate. The Chinese Yuan weakened a further 0.6% against the U.S. dollar, ending the first half of 2022 with a 4.8% depreciation. Over the same period, the Japanese Yen and the Korean Won were some of the weakest in Asia, falling 15.2% and 8.5%, respectively, against the greenback.

The performance of precious metals was weak in June. Gold, platinum and silver prices fell between 1% to 6%. The first half of 2022 was a volatile period for precious metal prices with mixed results. Year-to-date returns to end-June came in at +0.6%, -5.4% and -11.6% for gold, platinum and silver prices, respectively.


Economic and Market News

Rate Hikes U.S. Fed Hikes Rates by 75bpsU.S. Hikes Rates by 75bps – On 15 June, the U.S. Federal Reserve raised the target range for the federal funds rate by 75bps, placing it at 1.50%-1.75%. The rate hikes seek to achieve maximum employment and, more pressingly, stabilize the long-run inflation rate at 2 percent. The Fed also anticipated further increases in the target range and will continue to reduce its balance sheet.

Other Rate Hikes Around the World – Mirroring the U.S. Fed, several central banks around the world also raised interest rates in June. Examples include Australia (+50bps), Brazil (+50bps), Canada (+75bps), India (+50bps), the Philippines (+25bps), Taiwan (+12.5bps) and the UK (+25bps).

China Economic Data: Inflation remained at 2.1% in May; Caixin/Markit PMI and Official PMI rose in June and Return to Expansionary Territory Since February

  • Inflation stood at 2.1% in May, unchanged from April’s five-month high figure.
  • China’s Caixin/Markit PMI climbed to 51.7 in June from 48.1 in May. The official PMI also rose to 50.2 in June from 49.6 in May. Both readings returned to the expansionary territory.

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About Author

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

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