Asia ETF Roundup (Market) – July 2022

Precious metals’ performance continued its weakness from the previous month. Gold, platinum and silver fell anywhere from 2% to 4%.

Economic and Market News

Rate Hikes: U.S. Fed Hikes Rates by another 75bps, ECB Hikes Rates by 50bps

• U.S. Fed Hikes Rates by 75bps – On 28 July, the U.S Fed announced to raise its federal funds rate by another 75bps, putting the target range at 2.25% - 2.50%. In total, the U.S. Fed has raised rates by 225bps since March 2022.  
• ECB Hikes Rates by 50bps – On 21 July, the European Central Bank announced to raise its three key interest rates by 50bps, placing them at 0.00%-0.75%. The rate hikes seek to stabilize the medium-term inflation rate at 2 percent. The Governing Council stated that “At the Governing Council’s upcoming meetings, further normalisation of interest rates will be appropriate…… The Governing Council’s future policy rate path will continue to be data-dependent and will help to deliver on its 2% inflation target over the medium term.”
• Other Rate Hikes Around the World – Several central banks around the world also raised interest rates in July. Examples include Australia (+50bps), Canada (+100bps), Malaysia (+25bps), New Zealand (+50bps), the Philippines (+75bps), and South Korea (+50bps).

Sri Lanka Prime Minister Declares Nation Now “Bankrupt”

On 5 July, Sri Lanka’s Prime Minister Ranil Wickremesinghe declared the country is “bankrupt.” According to various news reports, a report on debt restructuring and sustainability will be submitted to the International Monetary Fund by August. 

China Economic Data: Q2 GDP Growth Slowed to 0.4%; Inflation Climbed to 2.5% in June; Caixin/Markit PMI Fell in July and Official PMI Back in Contraction Territory

• China posted second quarter GDP growth of 0.4% YoY, the weakest performance since Q1 2020. This is compared to the 4.8% GDP growth in Q1 2022. Cumulatively, GDP grew by 2.5% YoY in the first half of 2022, far below the 5.5% annual target set by the government.
• Inflation climbed to 2.5% in June. This is compared to the reading of 2.1% in May and is the highest reading since July 2020.
• China’s Caixin/Markit PMI narrowed to 50.4 in July from 51.7 in June. The official PMI also fell to 49.0 in July, from June’s reading of 50.2, back in the contraction territory.