Asia ETF Roundup (Market)–November 2021

Major Markets Performance

A new COVID-19 variant, Omicron, stoked fresh fears around the globe and brought with it with tightened travel policies and social restrictions in many countries. Stock markets generally suffered in November. The Morningstar Global Markets, Developed Markets, US Market, Emerging Markets, and Europe indexes fell anywhere from 1-6% during the month. Equity markets in Thailand, Indonesia, Malaysia, and Pakistan slipped 3%-5%, while Russia’s stock market dropped 11%. Chinese equities also fell 5.6% in the month (All proxied by their respective Morningstar indexes in U.S.-dollar terms).

The U.S. dollar appreciated 2.0% (as measured by the ICE Spot Index) in November. The Euro depreciated around 2.7% against U.S. dollar. Major Asian currencies depreciated against the greenback. The Thai Baht, Indian Rupee, Korean Won, Malaysian Ringgit, and Singapore Dollar depreciated around 1%-2%. Meanwhile, the Chinese Yuan appreciated 0.4% against the U.S. dollar, increasing its year-to-date gain to 2.7%.

Precious metals’ performance was mixed in November. The prices of platinum and silver dropped 4%-6% while the price of gold rose 2% during the month.

Economic and Market News

Rate Hikes in New Zealand and South Korea; U.S. Fed Starts Tapering Bond Purchases

• New Zealand Hikes Rates by 25bps – The Reserve Bank of New Zealand raised its key interest rate by 25bps to 0.75% on 24 November. This marked the bank’s second hike in two months, collectively adding 50bps during the year. The Bank stated that “The Committee expected that the [Official Cash Rate] OCR would need to be progressively increased and, conditional on the economy evolving as expected, the OCR would likely need to be raised above its neutral rate.”
• South Korea Hikes Rates by 25bps – The Bank of Korea raised its key interest rate by 25bps to 1.00% on 25 November. This marked the bank’s second hike in three months, and it has tacked a total of 50bps onto its key rate this year. The Bank stated that “The Board will continue to conduct monetary policy in order to sustain the recovery of economic growth and stabilize consumer price inflation at the target level over a medium-term horizon, while paying attention to financial stability.”
• U.S. Fed Starts Tapering Bond Purchases – On 3 November, the U.S. Federal Reserve announced that it will begin reducing its asset purchases later in the month. The reduction will result in reducing the monthly purchases of Treasuries by USD 10 billion and monthly purchased of mortgage-backed securities by USD 5 billion.

Beijing Stock Exchange Established

On 15 November, Beijing Stock Exchange was officially launched with 81 companies listing on the new market. According to the announcement, there were 2.1 million qualified investors and 112 securities companies that obtained full member qualifications on the stock exchange as of 12 November. The news and the regulation announcement can be found here (Chinese only).

Didi To Delist from the New York Stock Exchange

On 2 December, Chinese ride-hailing giant DiDi Global (DIDI, listed in the U.S.) announced it would delist from the New York Stock Exchange, just six months after its IPO. According to Didi’s announcement, the company will pursue a listing opportunity on the Hong Kong Stock Exchange. The announcement can be found here.

China Economic Data: Inflation at 1.5%; Caixin/Markit PMI Slipped to 49.9; Official PMI Rose to 50.1

• CPI increased to 1.5% in October from 0.7% in September. Transportation and Communication were the key contributor, with, “Fuels for Vehicles” rising 31.4% YoY. Meanwhile, pork prices fell 44.0% YoY.
• In November, the Caixin/Markit PMI slipped to 49.9, from October’s reading of 50.6, which is the second contraction since April 2020. Meanwhile, the official PMI rose to 50.1 from October reading of 49.2.