Asia ETF Roundup (Market) – May 2021

Major Markets Performance

U.S. President Biden proposed a USD 6 trillion budget for the 2022 fiscal year. The bill includes a tax increase and plans for reinvestment in infrastructure and education. Global equity markets generally had a good month. The Morningstar Global Markets Index ended May 1.5% higher. In the U.S., the S&P 500 and Dow Jones Industrial Average indexes notched all-time highs during the month. The Morningstar US Market Index ticked up 0.4% in May. Asian markets’ performance was mixed. Chinese and Korean equity markets posted gains of 0.6% and 0.9%, respectively, while stocks in Taiwan slipped by 1.9% (proxied by their respective Morningstar indexes in U.S.-dollar terms).

The U.S. dollar dipped in May (the ICE Spot Index was down 1.6%). The Euro and many Asian currencies appreciated against the greenback. In particular, the Indian Rupee and New Taiwan Dollar appreciated 2.0% and 1.2% against the U.S. dollar while the Malaysian Ringgit fell 0.7%. The Chinese Yuan strengthened 1.7% versus the U.S. dollar, putting its year-to-date gains at 2.8%.

Precious metals’ performance was mixed in May. Gold and silver prices rebounded during the month, rising 7.5% and 6.8%, respectively. Platinum retreated in May, falling 3.9%, narrowing its year-to-date gain at 16.0%.

Economic and Market News

Rate Hikes in Brazil

• Brazil Hikes Rates by 75bps – On 5 May, the Central Bank of Brazil raised interest rates by 75bps to 3.50%. This marked the second hike this year, following a 75bps increase in March.The Bank foresees another 75bps hike in June as it moves to bring inflation forecasts back down to its target.

China Economic Data: Inflation at 0.9%; Caixin/Markit PMI and Official PMI Little Changed; Population Grew to 1.412 Billion

• Inflation registered at 0.9% in April, up from 0.4% in March.
• China’s Caixin/Markit PMI reading ticked up slightly to 52.0 in May, from a reading of 51.9 in April. Meanwhile, the official PMI in May fell to 51.0, down slightly from April’s reading of 51.1.
• China’s overall population grew to 1.412 billion at the end of 2020, according to the Seventh National Population Census, from 1.4 billion a year earlier. 12 million new births were recorded last year, down by 18% year-on-year.

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