For the latest ETF industry news, please refer to our “Asia ETF Roundup (Industry) – May 2015”.
Major Markets Performance
The Chinese onshore equity market continued its rally in May, although at a slower pace. The major Chinese equity indices rose 2-4% (CSI 300 +1.9%; Shanghai Composite +3.8%). The performance of other global developed markets was mixed. Hong Kong’s HSI dropped 2.5%, while the S&P 500 made new highs and finished the month 1.0% higher from where it started. Japan’s equity market performed well, rising 5.3%, but the Japanese Yen depreciated 3.8% against the greenback. Performance of the Emerging/Frontier markets was also mixed. Brazil performed badly, dropping 12%, after a 16% rally in April, while other Asian emerging/frontier markets had a mixed showing for the month, with performances ranging from -7% to +3% (as measured by the MSCI indices covering these markets, expressed in USD terms).
The U.S. dollar strengthened in May (ICE USD Spot +2%). Many Asian currencies depreciated against the U.S. dollar with moves ranging from -4% to +0.1%.
Precious metals’ performance in May was mixed. Gold and silver prices rose 0.9% while platinum dropped 1.8%.
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Economic and Market News
China Cuts Rates; Pakistan slashes rates to 42-year low
- US Fed Minutes (April 2015) – Minutes of the April FOMC meeting revealed that “Many participants, however, thought it unlikely that the data available in June would provide sufficient confirmation that the conditions for raising the target range for the federal funds rate had been satisfied, although they generally did not rule out this possibility”. This comment eased some market participants’ concerns of a rate hike in June, but the timing of the rate hike remains a key market concern.
- China Cuts Rates by 25bps – On 10 May 2015,the PBoC cut deposit and lending rates by 25bps. It had previously lowered rates in February 2015 and November 2014 and also lowered the reserve requirement ratio (RRR) in April, and February.
- Pakistan Slashes Rates to 42-year Low – On 23 May 2015, the State Bank of Pakistan cut the discount rate by 100bps to 7.0%. This is the fourth straight meeting cutting the discount rate, putting it at the lowest in 42 years.
Chinese Economic Data: Inflation at 1.5% in April; HSBC/Market PMI at 49.2 in May; Official PMI at 50.2
- China’s inflation rate landed at 1.5% in April, slightly higher than March’s reading of 1.4%.
- Official May PMI registered at 50.2, comparing to April’s 50.1. Meanwhile, the HSBC/Markit Purchasing Managers' Index edged up slightly in May, landing at 49.2, comparing to April’s 49.1.
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