Multi-Asset Perspective – June 2023


Our investment director and head of Multi-Asset, Kelly Chung, shares her latest insights on different asset classes.  AI-related technology has become an area of interest among investors, attracting significant foreign inflows in tech-heavy markets, such as Taiwan and Korea.

Meanwhile, the Greater China market continues to face some challenges, given the soft economic data in April and May. While we view that the country’s economic recovery remains intact longer-term, it requires some policy support to regain momentum.

China/Greater China equities
  • The market now expects the Fed to pause its rate hikes in the June FOMC meeting due to the rising unemployment rate and moderating average hourly earnings in the US. Investor sentiment toward the US equities market was also boosted by Nvidia’s “overwhelming” guidance, increasing investor confidence in the demand and outlook of AI-related technology. As a result, the market is speculating that the economic slowdown or recession in the US may be pushed to the following year.
  • The Hong Kong/China market has remained range-bound with very weak sentiment. Investors worry about a double dip in the economy, given the soft economic data in April and May. The weakness in the property market is dragging consumption post-Covid recovery. We believe there will be some policy support, both fiscal and monetary, but it may not come until the second half of the year. We view that China’s economic recovery remains intact but requires some support to regain momentum.
China A-shares
  • The market has become very bipolar as investors only favor sectors and companies with high earnings visibility, such as AI-related technology sectors and SOEs with improving ROEs. The rest are being de-rated, given the uncertainty in China’s economic recovery. In addition, geopolitical factors also weigh on market sentiment.
Asia ex-Japan equities
  • Similar to the US, investors have been focusing on AI-related technology as the area provides the highest earnings visibility. Hence, tech-heavy markets, such as Taiwan and Korea, recently witnessed significant foreign inflows. Meanwhile, the macro outlook and earnings momentum in other parts of the region, such as India and the Philippines, have been improving.
  • On the other hand, the potentially large amount of Treasury issuance due to the lifted US debt ceiling led US Treasury yields to rise, putting some pressure on the market in general.
Emerging market ex-Asia equities
  • Stronger currencies in the region and the narrowing EM credit spread supported EM equities.
Japanese equities
  • Japan is the best-performing country QTD, with continued inflows from foreign investors as they expect ROE improvement, given the rise in share buybacks and Warren Buffett’s bullish pledge toward Japan. Q1 GDP also outweighed expectations, with tourism’s contribution exceeding pre-Covid levels.
  • However, valuations are also running ahead of fundamentals, with NIKKEI’s 225 forward P/E approaching 20x.1 We are cautious of the recent frenzy toward Japanese equities, as ROE improvement is still yet to be seen, and rising wage pressures are mounting.
Asia investment grade bonds
  • Recent new issuance in Asia investment grade bonds is very active, and the demand is strong.  Credit spreads keep tightening, while the rising Treasury yields add to duration risks, given that the potentially large amount of Treasury issuance after the US debt ceiling lift will keep yields high.
Asia high yield bonds
  • There is some demand returning to Asia ex-China high yield bonds after some correction as yields look attractive. After the Adani debacle in India fizzled out, the demand for Indian high yield bonds has become strong, given the improving earnings momentum.
Emerging market debt
  • Stronger currencies in the region and better momentum supported the EM credit spread to continue to narrow.
  • However, the rising Treasury yields add to duration risks, given that the potentially large amount of Treasury issuance after the debt ceiling lift will keep yields high.
  • Gold should continue to benefit as the US rate hike peaking.Gold remains a good hedge against heightened geopolitical risks.
  • Multi-asset 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.


  1. Bloomberg, 12 June 2023