Amundi Asia Pacific Market Monthly Commentary - October 2022

Wednesday 30 November 2022

Market Commentary

Asian Fixed Income and Equities continued to underperform in October, primarily due to China weakness. Global risk assets remained volatile but broadly benefited from expectations of a Fed pivot and the UK reversing direction on the mini-budget.

On the monetary policy front, most central banks kept their foot on the tightening pedal this month. In response to FX depreciation pressure, several opted to hike in large, front-loaded increments (the Philippines, Vietnam, India and Indonesia). Meanwhile, central banks in Malaysia, Thailand and Taiwan resorted to gradual adjustments, prioritizing domestic growth recovery. On the other hand, China and Japan stood out as clear exceptions as they remained on easing paths.

Moving onto the political front, following the conclusion of the 20th National Congress and the re-election of President Xi in China, risk sentiments deteriorated. Investors were concerned the new leadership team would place a greater focus on state control and regulatory reforms. The lack of any meaningful signs that authorities would ease their stance on zero-Covid was also a matter of concern.

Against this backdrop, MSCI Asia ex Japan Index fell 6.13% (in USD terms, net dividends excluded), underperforming the MSCI World Index which returned 7.11% (in USD terms, net dividends excluded).