Multi-Asset Perspective – May 2024


Following the correction in the US equities market, flows in Asia are shifting from the higher beta markets – such as Japan, Taiwan, and India, to the Hong Kong and China markets, where valuations are attractive.

Elsewhere, Southeast Asia markets are seeing some pressure amid the still higher for longer interest rates in the US and the strong greenback.

Various geopolitical risks worldwide also continue to be a major headwind to the overall region, especially with the heightened geopolitical tensions in the Middle East.

Key indicesApril 2024 performanceYTD performance
MSCI AC Asia ex-Japan Index (in USD)1.25%3.65%
MSCI China Index (in USD)6.60%4.26%
CSI 300 Index (in CNY)2.01%5.18%
Hang Seng Index (in HKD)7.45%4.73%
Taiwan Stock Exchange Index (in TWD)0.58%14.16%
MSCI Taiwan Index (USD)-2.30%9.84%
JPM ACI China Total Return Index (in USD)-0.50%1.14%
JPM Asia Credit Total Return Index (in USD)-1.17%0.24%

Source: J.P. Morgan, MSCI, Morningstar, Data as of 30 April 2024

China/Hong Kong equities

  • The market has further adjusted its rate cut expectations to less than two cuts as inflation remains more persistent than initially expected. Although the Fed has assured the market that there will not be any further rate hike, the rate cut is expected to be pushed back to later this year, with the central bank noting that there hasn’t been much progress on lowering inflation recently. As a result, treasury yields have come off from the recent high, although we expect that yields will stay around the current levels for longer. The first rate cut may not happen until after the election. Additionally, with some signs of economic weakening, the US equity market will likely, at best, move sideways.
  • With the correction in the US, flows in Asia are moving away from the higher beta markets – such as Japan, Taiwan, and India – back to Hong Kong and China, where valuations are cheap. The market rallied on the back of recent policies supporting the property market and the pro-growth signals from the Politburo meeting. However, after a 15% rally, the Hong Kong China market will likely take a pause, with investors refocusing on fundamentals and economic data.

China A-Shares

  • Foreign inflows have returned with hopes of more pro-growth policies and reforms. Company earnings have bottomed, with upward revisions yet to be seen. Many companies have also increased dividend payouts to improve ROE and restore investor confidence. The average dividend payout of the market is now more than 40%.
  • However, following the Politburo meeting, the market will likely take a pause before more long-only foreign investors pour more money into the market.

Asia ex-Japan equities

  • With the higher for longer interest rates in the US and the strong US dollar, Southeast Asian countries are facing some pressure on their funding costs. Countries like Indonesia also needed to hike rates to keep its currency steady. We expect there will be some further correction in Southeast Asian equities.
  • Investors are gradually shifting back to Hong Kong and China from higher beta countries, such as Japan, Taiwan, and India. Also, the market is getting a bit more differentiated, particularly with the winners from AI-related businesses among the technology companies in Taiwan following the hype across the sector.

Emerging market ex-Asia equities

  • The strong greenback capped the upside of emerging market equities, although higher commodity prices support commodity-heavy countries in the market. The recent heightened geopolitical tensions in the Middle East are also a risk.

Japanese equities

  • The Japanese yen has moved to a 34-year low vs. the US dollar, breaching 160 at one point. The Bank of Japan repeatedly intervened in the market to support the currency. The local currency is now weaker than what the yield differentiation suggests, which shows how biased the market is towards a weakening yen. Although the weak currency will continue to help exporters and tourism, investors are now more concerned about the higher currency volatility’s impact on the overall economy.

Asia investment grade bonds

  • With the more persistent inflation in the US, US treasury yields are likely to stay around the current high levels. Investors have become more cautious about adding duration. Asian investment grade bonds will remain mainly for carry as spreads are already at very tight levels.

Asia high yield bonds

  • After the market chasing high yield names in the past couple of months, with even some Chinese property bonds rallying, we believe the market will take a pause from here. Many names are already trading at the high 90s or even more than par. Spreads have tightened a lot. Given the weaker macro environment, especially in Indonesia, investors could experience some setbacks.

Emerging market debt

  • Spreads have become even tighter while demand remains strong. Higher treasury yields and the strong US dollar put some pressure on the market’s momentum.


  • Gold prices again broke their historical high, given the current heightened tensions in the Middle East. In addition to geopolitical worries, investors are concerned about the de-dollarization trend.
  • However, as the surge was very rapid, similar to the previous rounds, some correction is imminent. Nevertheless, gold remains a good geopolitical hedge in the medium to long term.


  • 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.