Multi-asset perspective – April 2021


The pace of yield curve steepening turned less violent than some previous sessions, giving the global bond market a breather.

Closer to home, investor sentiment has been widely capped by the anticipated tightening bias in China as well as the escalating geopolitical risks.

Key indicesMar 2021 performanceYTD
MSCI AC Asia ex-Japan Index (in USD)-2.5%2.7%
MSCI China Index (in USD)-6.3%-1.5%
CSI 300 Index (in CNY)-6.8%-3.3%
Hang Seng Index (in HKD)-2.0%4.3%
Taiwan Stock Exchange Index (in TWD)3.1%11.7%
MSCI Taiwan Index (USD)-0.5%10.9%
JPM ACI China Total Return Index (in USD)-0.5%-0.9%
JPM Asia Credit Total Return Index (in USD)-1.2%-0.4%

Source: J.P. Morgan, MSCI, Morningstar, Data as of 31 March 2021


China / Hong Kong Equities

  • Economic activities in China remain strong. However, a higher-than-expected Producer Price Index added some worry to the manufacturing inflation. Also, the tightening bias in China continues as the PBOC asked banks to curb lending, which has capped investor sentiment. The escalating geopolitical risk is also a hidden negative factor for the market sentiment.


China A-Shares

  • Tighter liquidity and rising SHIBOR are reasons to be cautious on the China A-Share market. Most A-shares companies have reported Q4 earnings and have been pretty much in line. The momentum of upward earnings revision is fading. Mutual funds and retail investors are turning cautious.


Asia ex-Japan Equities

  • After the Q4 earnings report, earnings revision has normalized. With the rising yield in the U.S., a technical reversal of the USD started to pressure Asia. As value rotation continues, Southeast Asia where value sectors take up a higher weighting shall enjoy a large room for a catch-up. However, some countries where another wave of COVID is surging, such as India and the Philippines, have worried investors about their pace of reopening.
  • Taiwan continued to outperform its Asian (ex-Japan) peers. Despite volatility caused by the sharp rise in U.S. bond yields, the MSCI Taiwan Index in March rose 2.5%. This is attributed to sustained demand for advanced tech products and a solid economic growth outlook.


Emerging Market ex-Asia Equities

  • With the rising yield in the U.S., a technical reversal of the USD is negative for emerging markets. Also, some countries such as Brazil has returned to full lockdown again due to the surging COVID cases while the delivery of vaccine is behind the curve.  On the other hand, the strong commodity prices continue to support the markets.


Japanese Equities

  • Economic and corporate data are supportive of the market. The widening yield differential between the U.S. and Japan has caused the JPY to weaken and will weaken further. This is supportive to most of Japanese companies, especially the export sector.


Asia Investment Grade Bonds

  • The U.S. Federal Reserve remains dovish and keeps the stance that inflation is only temporary. The pace of yield curve steepening has moderated which has given the bond market a breather.


Asia High Yield Bonds

  • The disappointed earnings of some Chinese property companies have caused the Chinese property high yield bond space to correct. It is offset by the rally of some industrial bonds given the higher commodity prices.  Asian high yield bonds remain volatile in the near term.


Emerging Market Debt

  • The Fed remains dovish and keeps the stance that inflation is only temporary. The pace of yield curve steepening has moderated which has given the bond market a breather. The robust industrial metal prices continue to support emerging market debt.



  • With the V-shape economic recovery and higher inflation expectation, flows have been focused on industrial commodities and Gold has experienced one of the biggest outflow YTD. However, over the long term, Gold remains a good hedge against geopolitical uncertainties and would benefit from the easing fiscal policies.



  • Multi-asset offers a lower volatility level compared to a traditional single asset or a balanced portfolio. However, the correlation between risk-assets, such as equities, credits, and commodities, has increased dramatically recently. In an uncertain environment with low yields, income becomes an essential source of return for investors.


The author is Kelly Chung, our Senior Fund Manager.

Read more

The views expressed are the views of Value Partners Hong Kong Limited only and are subject to change based on market and other conditions. The information provided does not constitute investment advice and it should not be relied on as such. All materials have been obtained from sources believed to be reliable as of the date of presentation, but their accuracy is not guaranteed. This material contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.

Investors should note that investment involves risk. The price of units may go down as well as up and past performance is not indicative of future results. Investors should read the explanatory memorandum for details and risk factors in particular those associated with investment in emerging markets. Investors should seek advice from a financial adviser before making any investment. In the event that you choose not to do so, you should consider whether the investment selected is suitable for you.

This commentary has not been reviewed by the Securities and Futures Commission of Hong Kong. Issuer: Value Partners Hong Kong Limited.