World equity markets continued to drop in June, with the MSCI AC World Index down a further 3% in US dollar terms. US markets led the decline, off by more than 5 percent in the month. Meanwhile, European markets are down by 18% year to date, as concerns over public policy weigh on their currencies. The best performing regions of Asia and Japan, are also in negative territory for the year.
Asian equity markets declined in the month as risk aversion returned on concerns over the uncertainty of Europe’s sovereign debt woes. Over in Asia, the region’s economies grew in unison to post a robust set of numbers in 1Q10, which mostly exceeded expectations. This led to an overall move towards policy normalisation by most central banks in the region. Exports also continued to grow very strongly during the quarter and are likely to moderate going forward as favourable base effects wear off.
TOPIX fell 4.43% to 841.42 in June 2010. In addition to the European financial crisis, the release of several weak US economic indicators ignited fears of a “double dip”. There were also concerns that the Group of 20’s pledge to cut deficits will weigh on the global recovery. The Yen continued to appreciate due to risk aversion, leading to a sell-off in exporters.
China announced on 19 June that they will “proceed further with reform of the RMB exchange rate regime and increase the RMB exchange rate fl exibility”. Asian equity markets were lifted by the expectation that the RMB and the other Asian currencies are now set to appreciate. China’s move to dismantle its peg to the US dollar has also been interpreted as a sign that the Chinese authorities see stability in the macroeconomic conditions despite the recent concern that the debt crisis in Europe may spill over to the global economy.
World equity markets fell sharply in May, with the MSCI AC World Index down nearly 10% in US dollar terms. European markets led the decline, off by more than 13 percent in the month and nearly 20% year to date. The Greek issues which started to buffet European markets in late April resulted in a sharp increase in risk aversion and a broad scale drop in risk assets, including equities. No region was spared, with returns for the year now all in negative territory. The Euro Stoxx 600 Index fell nearly 6% in Euro terms, and by almost 13% in US dollar terms, as the Euro continued to decline. The Euro fell from 1.32 against the US dollar to end the month at 1.23.
Asian equity markets were down in May as risk aversion returned on concerns over Europe's sovereign debt woes. The announcement of the €750bn Eurozone debt rescue package only calmed markets for a short period. In Asia, policy normalisation continued in countries like China and Malaysia, with the aggressive moves in China contributing further to volatility. Fundamentally, Asian economies continue to show firm growth, with 1Q GDP data in most economies exceeding expectations. Asian export growth was strong in April, in line with the consistent strength in the recent US ISM surveys.
TOPIX fell 10.8% to 880.46 in May 2010. The market opened the month with a sharp decline in response to a plunge in overseas stocks during the Japanese Golden Week holidays. The European Union's announcement of a Eurozone rescue fund triggered a rebound, but the momentum was short-lived due to concerns that the European fiscal crisis may threaten the region's financial system. Risk aversion drove the yen up, causing a selloff in companies with high exposure to Euro revenues.
Equity markets appeared to be stabilising last week with the €750 billion Eurozone debt rescue package but the unexpected ban on short selling by the German authorities has resulted in another hit to investor confidence.
Financial markets responded positively to the €750 billion stabilisation package announced by the Eurozone policymakers yesterday. MSCI Asia ex Japan was up 3%, Topix 1.3%, the S&P 500 4.4% and the Euro Stoxx 50 surged by 10.4%. Spreads in the European credit markets fell dramatically, with the benchmark 2-year yield on Greece’s government bonds falling from 18% to 7%.
Equity markets have been moving in a yo-yo pattern in recent days, rising on strong economic data and good corporate earnings but declining on concerns of the sovereign debt problems in Europe. Other developments which have also affected risk appetite include the continued tightening by the Chinese authorities and the proposed new “super tax” on mining companies in Australia.
World equity markets were flat in April, with the MSCI AC World Index unchanged in US dollar terms. Asian and Emerging Markets registered further gains, building on their early recovery. Part of the gain was also due to the appreciation of Emerging Market currencies. The US continued to charge along and has overtaken Japan as the best performing region on a year to date basis. European markets declined sharply in late April as concerns about Greece’s ability to re-finance its debt weighed on equity markets. The Euro Stoxx 50 Index fell by nearly 4% in Euro terms, and by almost 6% in US dollar team, with the weakening Euro exacerbating the performance in dollar terms. The Euro declined from the 1.35 to the dollar level to end the month at 1.33. It has dipped below the 1.28 level as we write.
Asian equity markets continued to edge up in April despite sovereign debt woes in Europe. Policy normalisation in China and India also dampened investor sentiment towards the end of the month. In contrast, Asian exports growth remain robust and should continue to persist going into the second quarter of the year, underpinned by a consistent strength of the broader regional Purchasing Manager indices and US ISM surveys. US dollar returns of Asian equity markets were further boosted by the appreciation of Asian currencies.
TOPIX rose 0.84% to 987 in April. The stock market remained strong in the early half of April, thanks to better economic data, and yen weakness. In the latter half of the month, new fears over the Greek debt crisis and Chinese yuan revaluation concerns weighed on the market. The fraud charge against Goldman Sachs also triggered concern about tighter financial regulation. Toward the end of the month, favorable earnings results and positive profit guidance helped the TOPIX close with a month-on-month gain.
The Monetary Authority of Singapore today re-centred the Singapore dollar policy band upwards and also shifted its policy stance from zero appreciation to one of 'modest and gradual' appreciation. The Singapore dollar jumped up about 1% against the US dollar following the announcement. The revaluation of the Singapore dollar comes on the back of very strong economic growth in the first quarter of 2010. The Singapore government has revised its full year growth forecast for 2010 from 4.5 % - 6.5% to 7% - 9%.
World equity markets rallied strongly in March, with the MSCI AC World Index up 6.2% in US dollar terms. Emerging Markets were the best performing region, driven by a strong recovery in Latin America and Emerging Asia. This was followed by a recovery in Europe, which rebounded after Greece managed to successfully refinance a portion of maturing debt. The Euro strengthened by nearly 2% from its low on 25 March to close the period at 1.35 to the US dollar. Japan lagged, although it is still the best performing region on a year to date basis.
Asian equity markets edged up in March as we saw an overall move towards policy normalisation by Asian central banks like China, India and Malaysia. The market was initially spooked by sovereign debt woes in the European Union before staging a strong rebound in March. Robust Asian exports were the main highlight of the quarter and should continue to see strength as indicated by solid US ISM Purchasing Manager Index and encouraging US retail sales numbers.
The TOPIX rose 9.47% to 978.8 in March. The strong market performance was attributed to improved investor confidence on the back of better economic data in Japan and overseas, and expectations of additional monetary easing by the Bank of Japan, which caused the yen to weaken. This in turn sparked off a broad-based rally led by exporters, and financials.
In 2008, equity mutual funds around the world experienced record redemptions. Since then, global data indicate that while bond funds have seen net inflows, equity funds have not. Given how strongly equities have performed over the past year, many may find it surprising that the rally has been so strong without net inflows into mutual funds. But with the strong rally in the past year, should investors stay on the sidelines or go into equities, albeit cautiously?
Anthony Raza, Senior Director and Head of Asset Allocation at UOB Asset Management Ltd, shares his views on the equities markets going forward.
On Sunday, the US House of Representatives passed the US Health Care Reform Bill, and the response of the market was a broad rally in Healthcare stocks. This removal of headline risk and the increase in clarity should benefit Healthcare stocks in the months ahead. Valuations of the Healthcare sector are at 20-year lows. The sector is also under-owned as uncertainty over the reforms has kept investors on the sidelines. We continue to be positive on the long term outlook for the Healthcare sector.
Last Friday, the Reserve Bank of India (RBI) hiked the repo and reverse repo rate by 25 basis points to 5% and 3.5% respectively. Our view is that the impact of the tightening on the Indian equity market is limited. Although concerns about tightening will persist, we believe the market has more or less priced these in and will focus again on fundamentals.
Life-cycle investing is an investment concept that has gained popularity in the United States and United Kingdom. In the US, life-cycle portfolios are the fastest-growing type of retirement or pension fund for retirees.
In this article, Norman Wu, senior director of UOB Asset Management, explores the concept of life-cycle investing in the context of financial planning.
World equity markets recovered in February after falling sharply in late January, with the MSCI AC World Index up 1.1% in US dollar terms. The US was the best performing region followed by Japan. Europe registered negative returns, as concerns about Greece and the ‘PIGS’, an acronym to describe Portugal, Ireland, Greece and Spain, weighed on the European currency and created concerns around growth prospects for the broader Euro-zone.
Asian equity markets edged up in February despite concerns about Greece’s debt problem. In contrast to European economies, Asian economies are in relatively better shape and most of the Asian countries have emerged from the recession to post very healthy GDP growth in 4Q09. As such, central banks in Asia are now beginning to normalise their policy stance. The People’s Bank of China has led the way, tightening bank lending rules and hiking the required reserve ratio by 50 basis points. The outlook for Asian exports continues to be bright with the ISM index rising to 58.4 in January, its fastest pace since August 2004.
The TOPIX fell 0.78% to 894.1 in February. Japan equity prices were volatile because of external events. The month started off on an upbeat note, in response to improved US economic data. However, renewed concerns over fiscal woes in some European countries caused the market to be sold down sharply. The Fed’s move to raise the discount rate also spooked investors. Later, stability returned on news that the European Union will support Greece. Towards month-end, yen appreciation sent Japanese stocks south again.
Equity markets continue to be volatile with the focus of the market currently on Greece’s large debt problem. The credit default swap spreads on Greek sovereign have widened out to levels higher than was seen during the worst months of the global credit crisis.
The China market has corrected close to 10% since the beginning of the year, following market jitters on higher inflation and the announcement of measures by Beijing to cool down its domestic economy. Notwithstanding investors’ nervousness about more policy tightening measures to come, we view the measures taken by the Chinese government now as good for the market in the long term.
World equity markets fell in January, with the MSCI AC World Index down 4% in US dollar terms. Asia and Europe posted the larger declines due to the twin concerns of monetary tightening in China, which adversely impacted Asia, and mounting economic and fiscal concerns in Europe centered around Greece and the ‘PIGS’, an acronym to describe Portugal, Ireland, Greece and Spain, all countries running unsustainable fiscal deficits.
Asian equity markets in January corrected as monetary policy normalisation took place earlier than the market had anticipated. Among the larger Asian economies, the People’s Bank of China raised the reserve requirement ratio by 50 basis points in the middle of the month, while the Reserve Bank of India hiked the cash reserve ratio by 75 basis points at the end of the month.
The TOPIX fell 0.71% to 901.12 in January. Share prices of exporters, especially marine transporters, and resource stocks, rose in the early part of the month in response to the release of favourable economic data from the US and China. The financial sector also saw buying interest, as the major banks’ equity financing announcements were taken as a sign that negatives have played out.
The People’s Bank of China (PBOC) yesterday raised the reserve requirement ratio (RRR) for Chinese banks by 0.5%. The new RRR will rise to 16% and takes effect from 18 January 2010. The PBOC also raised rates in the interbank market for the second time within a week.
Over the past year, prices for commodities and commodity-related assets have risen sharply, recovering much of the ground lost during the 2008 financial crisis.
In this article, UOB Asset Management’s Robert Adair shares his views on commodities outlook for 2010.
On January 21 President Barack Obama called for tough new rules that would limit the size and trading operations of commercial banks. These new proposals are currently being referred to as the “Volcker Rule”, due to Paul Volcker’s strong and vocal views during the regulatory reform debate.
Asian equity markets are suffering their largest correction since March 2009. The trigger was the hike in the reserve requirement ratio by the People’s Bank of China in the second week of January. Risk appetite has also been affected by President Obama’s proposed curbs on the trading activities of US banks. In Europe, there are fresh concerns about Greece’s ability to repay its sovereign debt.
World equity markets advanced further in December, with the MSCI AC World Index up 2% in US dollar terms. Equity markets registered strong gains driven by a significant re-rating from the distressed levels at the start of the year. The MSCI AC World Index rose 31.5% over the 12 months ended December.
Asian equity markets managed to post healthy gains during the quarter even as Dubai World’s debt problems triggered a brief bout of risk aversion. With the US ISM Purchasing Manager Index expanding further to 55.9 points in December 2009, Asia saw its exports recover to finally register positive year-on-year growth numbers.
In December, the TOPIX rose 8.1% to 907.6 but returns were lower in most other currencies because the yen also depreciated during the month. The market rebound was in reaction to further monetary easing by the Bank of Japan (BOJ), and a depreciation of the currency.
