Amundi Asia Pacific Market Monthly Commentary - August 2022
Thursday 29 September 2022
August proved to be a month of two halves for markets. Risk assets started strong, building on their gains from July amid optimism of a Fed pivot. The rally was short-lived with the positive mood beginning to turn towards the halfway point of the month, primarily due to a hawkish Fed, USD strength and a slowdown in global growth momentum. Following Powell’s speech at Jackson Hole which reaffirmed the Fed’s hawkish stance, risk sentiment further deteriorated.
In EM Asia, inflation and monetary policy remained in the spotlight with prices continuing to trend upwards. Central banks in India (+50bps), Thailand (+25bps), the Philippines (+50bps), Indonesia (+25bps) and Korea (+25bps) all decided to hike their policy rates during the month. On the contrary, Chinese authorities surprised markets by cutting key interest rates (1-year MLF and 7-day reverse repo) by 10bps. Authorities also cut the 5-year loan prime rate (LPR), a reference rate for mortgages, by 15bps. The 1-year LPR was cut by only 5bps.
Against this backdrop, MSCI Asia ex Japan Index slightly dipped 0.22% (in USD terms, net dividends excluded), still outperforming the MSCI World Index which fell 4.33% (in USD terms, net dividends excluded).