Multi-Asset Perspective – Nov 2023


Our investment director and head of Multi-Asset, Kelly Chung, shares her latest insights on different asset classes. In China, the government gave a clear message of policy support with its unexpected RMB 1 trillion bond issuance. However, although the economy is expected to bottom, investor confidence remains weak about next year’s economic growth.

Meanwhile, market sentiment should improve toward Asia ex-Japan equity markets as treasury yields and the US dollar stabilize.

Key indicesOctober 2023 performanceYTD performance
MSCI AC Asia ex-Japan Index (in USD)-3.87%-4.27%
MSCI China Index (in USD)-4.26%-11.24%
CSI 300 Index (in CNY)-3.10%-5.51%
Hang Seng Index (in HKD)-3.91%-10.46%
Taiwan Stock Exchange Index (in TWD)-2.15%17.15%
MSCI Taiwan Index (USD)-1.66%9.24%
JPM ACI China Total Return Index (in USD)-0.53%-1.18%
JPM Asia Credit Total Return Index (in USD)-0.65%0.60%

Source: J.P. Morgan, MSCI, Morningstar, Data as of 31 October 2023

China / Hong Kong equities

  • The 10-year Treasury yield rose above 5% for the first time since 2007 in October, partly due to concerns over more Treasury issuance as the US’ funding to Israel would increase the country’s budget deficit. In addition, the higher-than-expected inflation numbers and wage growth also added to worries about keeping interest rates higher for longer. However, the markets cheered as the US Fed kept interest rates unchanged for the second time during the November FOMC meeting, stabilizing Treasury yields. We expect Treasury yields to remain at the current levels for the remainder of the year unless something unexpected happens in the Middle East.
  • In China, the government gave a clear message of policy support with its unexpected RMB 1 trillion bond issuance. However, although the economy is expected to bottom, investor confidence remains weak about next year’s economic growth. We expect the market will remain range-bound in the near term and believe it will take time for consumers and the market to regain their confidence.
  • Hong Kong’s economy remains weak as consumption has moderated following the last installment of the government’s consumption voucher scheme. With tight liquidity and the RMB under pressure due to the strong US dollar, we expected limited upside in Hong Kong’s equities market.

China A-shares

  • Central Huijin, a unit of China’s sovereign fund, bought ETFs and bank shares to send a positive signal to the market. However, market sentiment remains weak with low foreign participation, given the uneven recovery of the economy. Property sales continued to contract, while demand remained muted, as evidenced by the flat CPI figures. In addition, the lower-than-expected non-manufacturing PMI in October and disappointing earnings in some service sector companies also dragged confidence. We believe the market is in the process of building its bottom, and it will take time for the market to regain its confidence.

Asia ex-Japan equities

  • As Treasury yields and the US dollar stabilize, market sentiment should improve toward Asia ex-Japan equity markets. With the tech sector in the US mostly beating expectations during the third quarter, sentiment has been lifted in Taiwan and Korea’s tech sectors. Taiwan’s tech companies also reported better-than-feared results, helping regain the market’s momentum. Southeast Asia also benefited from the stabilization of the dollar, and economic data remains healthy in these markets.

Emerging market ex-Asia equities

  • The higher oil prices supported the sentiment in emerging markets. The stabilizing Treasury yields and US dollar also helped.
  • However, as US recession risks have not faded away, and with the US Fed keeping rates higher for longer, investors remain cautious toward emerging markets, with continued outflows from the market.

Japanese equities

  • Bank of Japan (BOJ) further widened the policy yield curve control policy band, allowing the 10-year Japanese government bond yield to go beyond 1%. However, it committed to its unscheduled bond buying to maintain an ultra-easy monetary policy. The bank said easy monetary policy needs to be maintained, as there is still yet to be any strong evidence that its 2% inflation target can be maintained in the long term.
  • The prime minister also proposed more fiscal stimulus to help revive the economy. This added pressure to JGB yields. The longer the BOJ maintains its negative interest rate policy and yield curve control, the higher the costs will be for the economy later. Although earnings of export-oriented companies will benefit from the weaker yen, the market will likely become more volatile in the near term.

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 will help duration positions.
  • However, valuations of Asia investment grade bonds are getting more expensive.

Asia high yield bonds

  • Activities in Asian high yield bonds have become more active, especially in Southeast Asia markets. After the default of Chinese developer Country Garden, sentiment gradually improved as uncertainty was removed. Macau and China travel-related industrial bonds remain on a brighter spot, as its recovery is on track.

Emerging market debt

  • The higher oil prices helped the sentiment in emerging markets. The stabilizing of Treasury yields and US dollar also helped. The financial sector in emerging market bonds gained momentum as yields are attractive and fundamentals are healthy.


  • As Gold is a very good hedge against geopolitical risks, it has recently become a strong safe haven despite the higher Treasury yields due to the ongoing conflict in the Middle East.
  • However, the recent quick surge in price 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.