For the latest ETF industry news, please refer to our “Asia ETF Roundup (Industry) – June 2015”.
Major Markets Performance
Global markets had a volatile month. The major markets’ returns generally landed in negative territory, amid the reignited Greece debt crisis and renewed fears of a “Grexit”. The S&P 500 and FTSE 100 dropped 2.1% and 6.6%, respectively. The Chinese onshore equity markets made new 7-year highs in early June but subsequently tanked and finished the month down 7-8% (CSI 300 -7.6%; Shanghai Composite -7.3%; HSCEI -8.0%), falling some 16% from their early-June high. The PBoC cut rates and lowered the reserve requirement ratio towards the end of June. The performance of the emerging/frontier markets was mixed. Indonesia and Malaysia dropped 5-7% while Vietnam advanced 5.8% and Brazil rose 3.6% after dropping 12% in May (as measured by the MSCI indices covering these markets, expressed in USD terms).
Concluding the first half of 2015, the onshore Chinese equity markets performed strongly (+27-32%) followed by the Nikkei 225 (+16%) and the Hang Seng Index (+11%), while the S&P 500 was almost flat (+0.2%) and the Indonesia, Malaysia and Brazil markets dropped 10-13% (as measured by the MSCI indices covering these markets, expressed in USD terms).
The U.S. dollar depreciated in June (ICE USD Spot -1.5%), as the Japanese Yen and the Euro appreciated against the U.S. dollar at a similar magnitude. Performance of other Asian currencies was mixed, ranging from +0.3% to -2.8% against the U.S. dollar.
Precious metals’ performance in June was weak. Silver dropped 5.8%, followed by platinum (-3.3%) and gold (-1.7%).
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Economic and Market News
China Cuts Rates and Lowers RRR; India, New Zealand, Korea and Russia Cut Rates; Brazil Hikes Rates
- US Fed Statement (June 2015) – At the FOMC meeting in June, the Fed kept the Fed Fund rates unchanged. However, there was no clear indication on when rates will be raised.
- India Cuts Rates by 25bps – On 2 June 2015,the Reserve Bank of India (RBI) cut its policy repo rate by 25bps to 7.25%, citing low domestic capacity utilization, still mixed indicators of recovery, and subdued investment and credit growth. The RBI last cut rates in April and January 2015.
- Brazil Hikes Rates by 50bps – On 3 June 2015, the Central Bank of Brazil hiked base rates by 50bps to 13.75%. It had previously hiked rates in April, March and January 2015 and December 2014 (by 50bps each time).
- New Zealand Cuts Rates by 25bps – On 11 June 2015, the Reserve Bank of New Zealand cut the Official Cash Rate by 25bps to 3.25%. The Bank last adjusted rates in July 2014 by raising rates by 25bps.
- Korea Cuts Rates by 25bps – On 11 June 2015,the Bank of Korea cut its base rate by 25bps to a record low of 1.5%. The BOK last cut rates in March 2015.
- Russia Cuts Rates by 100bps – On 15 June 2015, the Central Bank of Russia cut key rates by 100bps to 11.5%. It had previously lowered key rates in April, March and January 2015.
- China Cuts Rates by 25bps and Lowers RRR – On 27 June 2015, the People’s Bank of China (PBoC) cut deposit and lending rates by 25bps, putting 1-year lending rate at 4.85%. It also lowered reserve requirement ratio (RRR) by 0.50% for commercial banks serving rural areas, agriculture and small businesses and 3% for finance companies. It had previously lowered rates in May and February 2015 and November 2014 and also lowered the reserve requirement ratio (RRR) in April, and February.
Chinese Economic Data: Inflation at 1.2% in May; HSBC/Market PMI at 49.4 in June; Official PMI Stayed at 50.2
- China’s inflation rate landed at 1.2% in May, softening relative to April’s reading of 1.5%.
- Official June PMI registered at 50.2, even with its May level. Meanwhile, the HSBC/Markit Purchasing Managers' Index edged up slightly in June, landing at 49.4, compared to May’s 49.2.
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