For the latest ETF industry news, please refer to our “Asia ETF Roundup (Industry) – July 2018”.
Major Markets Performance
Many global equity markets delivered positive performance during the month of July. The S&P 500 gained 3.6% and the U.K.’s FTSE 100 rose 1.5%. Many of the emerging- and frontier markets rebounded last month. Most notably, Brazilian stocks surged 11.7%. Meanwhile stocks in India, the Philippines and Thailand gained 6%-8% (all figures proxied by the respective MSCI country indices in U.S. dollar terms). Against the backdrop of the intensifying trade war tensions between the U.S. and China, the China A-share markets rose 0.2%-1.0% in local currency terms, but dropped almost 3% (MSCI China A Onshore Index in U.S. dollar terms) when accounting for the currency effect.
The U.S. dollar dropped by 0.2% in July, as measured by the ICE Spot Index. Asian currencies generally declined against the greenback. The Chinese Yuan registered a 2.9% decline against the U.S. dollar, leaving its year-to-date depreciation at 4.6%.
Precious metals’ prices continued to slide in July. This month saw declines in gold, platinum and silver prices of 2%-4%, putting their year-to-date declines at 5%-10%.
Economic and Market News
U.S. Keeps Rates on Hold; India Raises Rates
- U.S. Keeps Rates on Hold – On 1 August, the Federal Reserve maintained the target range for its federal funds rate at 1.75% to 2%.
- India Raises Rates by 25 bps – On 1 August, the Reserve Bank of India lifted its benchmark policy rate by 25 bps to 6.5%. The RBI again highlighted its neutral monetary policy stance, as was the case when it last raised rates in June.
Chinese Economic Data: GDP Grew 6.7% in Q2; Inflation at 1.9% in June; Official PMI Dropped to 51.2 in July; Caixin/Markit PMI fell to 50.8
- China recorded 6.7% GDP growth during the second quarter, surpassing the country’s 2018 growth target of “around 6.5%”, despite being down from 6.8% in the first quarter.
- China’s inflation rate registered at 1.9% in June, up from May’s reading of 1.8%.
- China’s official PMI reading for July dropped to 51.2 from June’s reading of 51.5. Meanwhile, the Caixin/Markit PMI for July registered at 50.8, down from June’s reading of 51.0.