Multi-Asset Perspective – Dec 2023


Our investment director and head of Multi-Asset, Kelly Chung, shares her latest insights on different asset classes. In China, we expect economic recovery to start in the second quarter next year and will likely go through a final capitulation with maximum bearish sentiment and positioning.

Additionally, the backdrop for Asia has become favorable, given the lower US treasury yields and a weaker US dollar.

Key indicesNovember 2023 performanceYTD performance
MSCI AC Asia ex-Japan Index (in USD)6.95%2.38%
MSCI China Index (in USD)2.52%-9.00%
CSI 300 Index (in CNY)-2.11%-7.51%
Hang Seng Index (in HKD)-0.16%-10.60%
Taiwan Stock Exchange Index (in TWD)8.96%27.65%
MSCI Taiwan Index (USD)13.16%23.62%
JPM ACI China Total Return Index (in USD)3.02%1.81%
JPM Asia Credit Total Return Index (in USD)3.69%4.31%

Source: J.P. Morgan, MSCI, Morningstar, Data as of 30 November 2023

China/Hong Kong equities

  • The 10-year Treasury yield dropped significantly from 5% to around 4.2% in a few weeks, as the market has turned very bullish, driven by rate cut expectations due to lower inflation numbers and dovish remarks from some Fed members. The market has now priced in 1.275% of rate cuts in 2024. Although this expectation is overly optimistic in our view, this has fueled the rally in both US equities and bonds. The rally was first driven by short covering and has now extended to retail participation, which should have some further room to run during the holiday season.
  • In China, although economic data remains weak, the government gave a clear message of policy support. The market is waiting for more messages from the Central Economic Work Conference, which will likely take place later in December. Companies were heavily punished by the market amid disappointing third-quarter earnings and lower guidance. However, the market will likely go through a final capitulation with maximum bearish sentiment and positioning. Our economic model points to an economic recovery starting in the second quarter of next year in China, given a more favorable comparison base.
  • Hong Kong’s economy remains weak as consumption is still fragile. With tight liquidity and continuous outflows, we remain cautious of the Hong Kong market, although the lower Treasury yields help ease some pressure.

China A-shares

  • Central Huijin, a unit of China’s sovereign fund, has continued to buy ETFs in the market. But market sentiment remains weak with low foreign participation, given the uneven recovery of the economy. Property sales continued to contract while demand remained muted. The stronger renminbi benefited from the weaker US dollar, and the easier real financial conditions provided some support to the market.
  • However, with continuous earnings downgrades, market sentiment remains weak. Foreigners have almost unwound the inflow into the A-share market earlier in the year with maximum underweight. Investors are on the sidelines waiting for the messages from the Central Work Conference.

Asia ex-Japan equities

  • As investors now expect a goldilocks environment, with aggressive rate cuts next year amid expectations of lower inflation and a soft landing, the US market has continued with its upside momentum. Together with lower Treasury yields and a weaker US dollar, the backdrop for Asian equities has become favorable.
  • Taiwan and Korea’s tech sectors, in particular, continue to ride on the momentum of the US tech market and benefit from the lower Treasury yields. Korea’s exports have grown 7.8% YoY in November, showing some signs of bottoming, particularly in the electronic hardware sectors. India is also riding on its momentum, given the country’s strong macro environment and strong domestic consumption.

Emerging market ex-Asia equities

  • The lower Treasury yields and weaker US dollar were also favorable for emerging markets ex-Asia. The lower CDS in countries such as Brazil helped the markets rally. Although oil prices have corrected due to the lower-than-expected supply cut deal, the market is dominated by the favorable movement in yields and expectations of a soft landing in developed markets.

Japanese equities

  • Given the lower US dollar, the Japanese yen has slightly appreciated, with lower CTA positions in USDJPY and short JGB. There could be some headwinds in the near term, given some profit-taking towards year-end. Also, Japan’s economy contracted in the third quarter after a strong second quarter.
  • While foreign investors have led the rally in 2023, there could be more domestic retail participation going into 2024, given the revamp of the new NISA (Nippon Individual Savings Account) scheme, which will take effect in January 2024.

Asia investment grade bonds

  • Asia investment grade bonds continued to attract inflows due to their attractive yield level of an average of more than 6%. Credit spreads keep tightening as new supply remains tight. The stabilizing Treasury yields help duration positions. The lower US dollar also supports the positive sentiment.

Asia high yield bonds

  • Activities in Asian high yield bonds have become more active, especially in Southeast Asia markets. Macau and China travel-related industrial bonds remain on a brighter spot, as its recovery is on track.

Emerging market debt

  • The upward momentum in emerging market bonds continued, fueled by the lower Treasury yields and weaker US dollar. Although the spread has already been tight, it continues to tighten further as demand remains very strong. The financial sector in emerging market bonds gained momentum as yields are attractive and fundamentals are healthy.


  • Gold prices have broken their historical high, given strong hopes of rate cuts next year. Although the rally has been relatively excessive, given the still high interest rates in absolute terms, the positive momentum is also fueled by some fear of de-dollarization driven by the Middle East.
  • While gold remains a good geopolitical hedge, the recent price surge may also lead to a bigger correction as volatility has increased.


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

Know more about Value Partners Asian Income Fund

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