Multi-Asset Perspective – June 2024


Money continues to flow back to Greater China equities, and while their valuations have improved, they are still below their historical average. The market now awaits concrete policy implementation, particularly in the property sector, as well as company earnings upward revisions.

Meanwhile, with artificial intelligence (AI) demand remaining strong and abating fears of this demand peaking, the tech-heavy markets in Asia are recovering after a correction. However, South Asia has become mixed, given signs of earnings slowdown in Indonesia and volatility arising from India’s election.

Key indicesMay 2024 performanceYTD performance
MSCI AC Asia ex-Japan Index (in USD)1.56%5.27%
MSCI China Index (in USD)2.40%6.76%
CSI 300 Index (in CNY)-0.46%4.70%
Hang Seng Index (in HKD)2.54%7.40%
Taiwan Stock Exchange Index (in TWD)3.82%18.52%
MSCI Taiwan Index (USD)5.30%15.67%
JPM ACI China Total Return Index (in USD)1.32%2.47%
JPM Asia Credit Total Return Index (in USD)1.33%1.57%

Source: J.P. Morgan, MSCI, Morningstar, Data as of 31 May 2024

China/Hong Kong equities

  • The significant rally in the Hong Kong China market in May was mainly driven by the re-rating of valuations to a more normalized level from the extremely bearish sentiment and investor positioning, thanks to the government’s proactive moves in announcing supportive policies, which surprised the market.
  • That said, while foreign investors have narrowed their under-allocation in the China market, they remain underweight due to the lack of details in some policies, such as a timeline for implementation. However, flows are coming back, and investors are increasingly fearful of missing out. Sentiment has improved to a better level.
  • Although valuations have improved, they are still below their historical average. The second leg of the rally will depend on more concrete policy implementation, particularly in the property sector and company earnings upward revision after hitting the bottom.

China A-shares

  • H-shares outperformed their A-share counterparts due to rumors of the removal of the 10% dividend tax. The A-H discount has narrowed significantly to a relatively tight level.
  • Investors are now turning back to fundamentals, with a focus on potential upward revisions of company earnings.
  • Within A-shares, there is also a gradual rotation from high-yielding SOEs to POEs with growth opportunities.

Asia ex-Japan equities

  • The Fed has clearly signaled that the chance of a further rate hike is extremely low. As inflation seems to be back on a downward trend, the market is less hawkish on interest rate expectations.
  • As there are also signs of an economic slowdown in the US, yields moved down, and the market may gradually reverse its rate cut expectation from only one time to two times this year.
  • With treasury yields moving down and the dollar peaking, sentiment toward Asian equities will likely improve. Also, with AI demand remaining strong and abating fears of demand peaking, the tech-heavy markets in Asia, such as Taiwan and Korea, are recovering after the correction.
  • However, Southeast Asia remains mixed, given signs of earnings slowdown in countries like Indonesia and the volatility arising from India’s election.

Emerging market ex-Asia equities

  • Although the softer treasury yields are favorable for emerging markets, elections in various emerging markets have created more volatility in both equities and currencies. Also, the upcoming US election may have significant implications for different emerging markets in Latin America and Eastern Europe. The continuous heightened geopolitical tensions in the Middle East remain a risk.

Japanese equities

  • The Japanese yen has moved to a 34-year low versus the US dollar. The Bank of Japan repeatedly intervened in the market to support the currency. The Japanese yen is now weaker than what the yield differential suggests, which shows how biased the market is towards a weakening yen.
  • Although the weak currency will continue to help exporters and tourism, it has created more investor concerns about the impact of higher currency volatility on the overall economy.

Asia investment grade bonds

  • Although spreads have been very tight, the demand for Asian investment grade bonds remains strong for carry, given their still relatively high absolute yields.
  • With the treasury yields likely heading down again, Asian investment grade bonds will remain well supported.

Asia high yield bonds

  • Spreads have tightened significantly after the rally. However, since Asian high yield spreads are still well above those in the US, demand remains strong, especially since net issuance continues to be down.

Emerging market debt

  • Spreads have become even tighter while demand remains strong. With the treasury yields likely heading down again, emerging market bonds will remain well supported.


  • Gold prices consolidated after breaking their historical high, which was expected. Gold remains a good geopolitical hedge in the medium to long term.
  • In addition to geopolitical worries, investors are concerned about the de-dollarization trend, which will likely continue to support gold prices.


  • 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.