Amundi Asia Pacific Market Monthly Commentary - June 2022

Thursday 28 July 2022

Market Commentary

Markets sold off in June as investors grappled with rate hikes and stagflation fears. Risk sentiments remained weak as central banks further tightened policy and concerns around a growth slowdown gathered steam.

In the US, the Federal Reserve hiked 75bps after CPI in May surprised to the upside. Following the rate hike, Powell remarked that a soft landing for the US economy would be increasingly difficult to achieve. Across Emerging Markets in Asia, inflation remained on an upward trajectory. Both Thailand and Singapore’s headline CPI rose to their highest levels since 2008, adding pressure on the central banks to tighten policy. In June, most central banks took steps to normalize policy, the notable exceptions being China and Indonesia which both stayed on hold during the month.

Against this backdrop, MSCI Asia ex Japan Index dipped 5.07% over the month (in USD terms, net dividends excluded), outperforming the MSCI World Index which fell 7.76% (in USD terms, net dividends excluded). China and Hong Kong were the only equity markets which delivered positive returns in June. Underperformance was led by Korea and Taiwan.