For the latest ETF industry news, please refer to our “Asia ETF Roundup (Industry) – November 2020”.
Major Markets Performance
The U.S. Presidential election grabbed the world’s attention in November, as Joe Biden was elected as the next president of the United States. On 12 November, President Donald Trump signed an executive order prohibiting U.S. persons from investing in securities issued by 31 Chinese companies, spurring uncertainty in the investment world. In the Asia region, at the beginning of the month, investors were anticipating the IPO of Ant Group, an affiliate of the Alibaba Group. This could have been the world’s largest-ever IPO. However, the IPO on the Hong Kong Exchange and the Shanghai Stock Exchange was suspended at the last minute, disappointing many investors. Global markets had a strong month, lifted by vaccine-related optimism. The Morningstar Global Markets Index and the Morningstar US Market Index rose by 12.6% and 12.0% respectively in November. The S&P 500 Index, the Dow Jones Index and the Nasdaq Index made new all-time highs during the month. Asian equity markets also rallied strongly in November with the Japan, Korea and Singapore stock markets posting double digit gains. Although the Chinese equity markets (proxied by the Morningstar China Index in USD) posted relatively smaller gains (3.9%), their year-to-date gain of 28.0% remains one of the strongest among global markets. Emerging markets also followed the trend, recording gains ranging from 4% to 24% (proxied by their respective Morningstar indexes in US-dollar terms).
The U.S. dollar depreciated in November (the ICE Spot Index was down 2.3%). Asian currencies generally appreciated against the U.S. dollar. The Chinese Yuan appreciated strongly against the U.S. dollar, climbing 1.8%, and putting its year-to-date gain at 5.8%. Precious metals’ performance was mixed. The prices of gold and silver fell 6% while price of platinum surged 14.9%.
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Economic and Market News
Rate Cuts in Australia, Philippines and Indonesia
- Australia Cut Rates by 15bps – On 3 November, the Reserve Bank of Australia cut interest rates by 15 bps to record low 0.1% from 0.25%.
- Philippines Cut Rates by 25bps – On 19 November, the central bank of Philippines cut interest rates by 25bps to 2.00%. The bank last cut interest rates in June and has cut rates by 200 basis points in total this year.
- Indonesia Cut Rates by 25bps – On 19 November, the central bank of Indonesia cut interest rates by 25bps to 3.75%. The bank last cut interest rates in July and has cut rates by 125 basis points in total this year.
Asia-Pacific Countries Sign Regional Comprehensive Economic Partnership (RCEP)
On 10 November, 15 Asian countries including Australia, China, Japan, Myanmar, the Philippines and Singapore established one of the biggest international trade partnerships, dubbed the Regional Comprehensive Economic Partnership (RCEP). RCEP combines most of the trade deals signed by 10 Southeast Asian countries into a single multilateral agreement with China, Japan, Australia, South Korea and New Zealand. It involves nearly one-third of the world’s population and global economic output. India withdrew from the negotiations in 2019. The partnership aims to foster trade and investment across Asia-Pacific countries by synchronizing trade deal rules among members, lowering tariffs and cutting non-tariff measures, as well as enhancing e-commerce, personal privacy protection and competition policy. Chinese Premier Li Keqiang said the signing of the RCEP was “a victory of multilateralism and free trade and provides new impetus to the recovery of world economic growth”.
China Economic Data: Inflation at 0.5% in October, An 11-Year Low; Caixin/Markit PMI at 10-Year High; Official PMI expanded
- Inflation registered at 0.5% in October, hitting an 11-year low. This compares to September’s 1.7%. China’s pork prices fell 2.8% in October from a year ago, a reversal of the sharp increases seen for a year-and-a-half.
- China’s Caixin/Markit PMI expanded further to its 10-year high in November, registering at 54.9. This is compared to the October reading of 53.6. The official PMI in October grew to 52.1, slightly stronger than October’s reading of 51.4.
