Asia ETF Roundup (Market) – September 2022

US Fed hikes rates by another 75bps.

Jackie Choy, CFA 12.10.2022
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For the latest ETF industry news, please refer to our “Asia ETF Roundup (Industry) – September 2022”.

Major Markets Performance

In September, the U.S. Fed hiked rates by another 75bps and global markets faced renewed concerns about the Russian/Ukraine war with Russia annexing four regions of Ukraine and the leaks found on the Nord Stream pipelines that carry gas from Russia to Europe. Global equity markets plunged. The Morningstar Global Markets and Development Markets indexes declined by 9.6% and 9.4%, respectively, while the Morningstar Emerging Markets Index plummeted by 11.1%.

The U.S. dollar appreciated strongly 3.1% in September as measured by the ICE Spot Index. Most currencies depreciated against the U.S. dollar. In particular, the Euro weakened 2.6%. The UK Pound experienced wild swings in valuations as markets reacted badly to the new government’s fiscal plans, even forcing an emergency intervention from the Bank of England to restore some calm. The UK Pound closed the month 4.1% lower against the greenback. In Asia, the Korean Won plunged by 6.5% while many other Asia currencies depreciated around 2-4%. The Chinese Yuan depreciated a further 2.8% to bring its year-to-date depreciation to 10.1%.

Precious metals performance was mixed. Gold prices fell 2.6% while prices of silver and platinum rose 6.0% and 2.3%, respectively. 

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Economic and Market News

U.S. Fed Hikes Rates by another 75bps; Other Central Banks Continue to Hike

  • U.S. Fed Hikes Rates by another 75bps – On 21 September, the Fed announced an increase in rates by 75bps, bringing the target range up to 3.0% - 3.25%, with the aim of achieving maximum employment and inflation at a rate of 2% over the longer run. In total, the U.S. Fed has raised rates by 300bps since March 2022. The Fed’s updated “Summary of Economic Projects” saw the median Fed funds rate projections raised to 4.4% and 4.6% for end-2022 and end-2023, respectively from 3.4% and 3.8% in June.
  • Other Rate Hikes Around the World – Several central banks around the world also raised interest rates in August. Examples include Australia (+50bps), India (+50bps), Indonesia (+50bps), Malaysia (+25bps), the Philippines (+50bps), Taiwan (+12.5bps), Thailand (+25bps) and the UK (+50bps).

China Economic Data: Inflation slipped slightly to 2.5% in August; Caixin/Markit PMI fell further in September but Official PMI back in Expansionary Territory

  • Inflation eased slightly to 2.5% in August from 2.7% in July.
  • China’s Caixin/Markit PMI declined further to 48.1 in September from 49.5 in August. By contrast, the official PMI rose to 50.1 in September from 49.4 in August, returning to expansionary territory.

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About Author

Jackie Choy, CFA  Jackie Choy, CFA is the Director of ETF Research for Morningstar Investment Management Asia

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