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Asia ETF Roundup (Market) – November 2022

U.S. Fed rate hikes to slow down?

Jackie Choy, CFA 09 December, 2022 | 10:44
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For the latest ETF industry news, please refer to our “Asia ETF Roundup (Industry) – November 2022”.

Major Markets Performance

The U.S. Fed raised interest rates by another 0.75% in November. The minutes of the meeting revealed that “a substantial majority of participants judged that a slowing in the pace of increase would likely soon be appropriate”. Global developed equity markets had another strong month (Morningstar Developed Markets Index rose 7.1%). China equity markets (proxied by the Morningstar China Index) turned around strongly in November, rising 28.2%. Other Asian markets also surged sharply. Japan, Malaysia, the Philippines, Singapore, South Korea, Taiwan and Thailand rose between 9-20% (as proxied by their respective Morningstar market indices).

The U.S. dollar depreciated a notable 5.0% in November as measured by the ICE Spot Index. The Euro further rebounded 4.2% against U.S. dollar, continuing the appreciation trend in October. Most Asian also currencies appreciated against the greenback. In particular, the Korean Won and the Thai Baht both climbed by 8.0% against the greenback in November. The Chinese Yuan appreciated 2.2% against the US dollar in November, although it still remained 10.8% down year-to-date.

Precious metals’ performance was strong in November. Prices of gold, platinum and silver rose by 7%, 9.6% and 12.5% respectively. 

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Economic and Market News

U.S. Fed Rate Hikes to Slow Down?

  • U.S. Fed Minutes Shows Rate Hikes to Slow – On 2 November, the U.S. Fed raised its target funds rates by 75bps, putting the range to 3.75% - 4.0%. In total, the U.S. Fed has raised rates by 375bps since March 2022. The Fed meeting minutes released on 14 November stated that “a substantial majority of participants judged that a slowing in the pace of increase would likely soon be appropriate”.
  • Other Rate Hikes Around the World – Several central banks around the world also raised interest rates in November. Examples include the Eurozone (+75bps), Australia (+25bps), Malaysia (25bps), the UK (+75bps), the Philippines (+0.75bps), Indonesia (+50bps), South Korea (+25bps) and Thailand (+25bps).

China Economic Data: Inflation dropped to 2.1% in October; Caixin and Official PMI Remained in Contractionary Territory

  • Inflation declined to 2.1% in October from 2.8% in September. This was the lowest level in seven months.
  • The Caixin China General Manufacturing Purchasing Managers Index rose slightly to 49.4 in November from 49.2 in October. On the other hand, the official PMI fell to 48.0 in November from 49.2 in October. Both readings remained in contractionary 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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