For the latest ETF industry news, please refer to our “Asia ETF Roundup (Industry) – February 2021”.
Major Markets Performance
Favorable news regarding COVID-19 vaccines occupied headlines during the month. More countries rolled out their vaccination programs and more vaccines were approved. Global equity markets generally had a good month. The Morningstar Global Markets Index ticked up 2.6% in February. In the U.S., the S&P 500, Dow Jones Industrial Average and Nasdaq indexes all notched all-time highs higher during the month. The Morningstar US Market Index ended February 3% higher. Many Asian markets recorded gains. India and Taiwan were among the stronger performers, climbing around 6% (proxied by their respective Morningstar indexes in U.S.-dollar terms). Chinese equity markets had a strong first half of February (Morningstar China Index +11.7% for the month to 17 February), but the gains were subsequently washed away. The Morningstar China Index ended the month 0.6% lower.
The U.S. dollar appreciated by 0.3% (as measured by the ICE Spot Index) in February. Asian currencies generally depreciated against the greenback. The Japanese Yen and the Indonesian Rupiah fell 1.7% and 1.5%, respectively. The Chinese Yuan was little changed against the US dollar in February, maintaining its year-to-date gains versus the U.S. dollar at 1.2%.
Precious metals’ performance was mixed for February. Platinum rose another 8.5%, putting its year-to-date gain at 19.3%. Gold and silver dropped during the month, slipping 6.5% and 2.7%, respectively..PNG)
Economic and Market News
Rate Cuts in Indonesia
- Indonesia Cut Rates by 25bps – On 18 February, the Bank Indonesia decided to lower the BI 7-day reverse repo rate by 25bps to 3.50%, the lowest since 2016. The Bank has cut rates by a total of 125bps in 2020. The Bank stated that “the decision is consistent with projected low inflation and maintained exchange rate stability as well as follow-up efforts to support national economic recovery momentum.”
China Economic Data: Deflation of 0.3% in January; Caixin/Markit PMI and Official PMI Expansion Slows
- China reported deflation in January, with the CPI fell 0.3% YoY, which compares to 0.2% inflation in December 2020 and a -0.5% reading in November 2020.
- Both the Caixin/Markit manufacturing PMI and the official manufacturing PMI recorded slower expansion in February. China’s Caixin/Markit PMI fell to 50.9 from January’s reading of 51.5. The official PMI in February fell to 50.6 from January’s reading of 51.3.
