Multi-Asset Perspective – Oct 2023


Our investment director and head of Multi-Asset, Kelly Chung, shares her latest insights on different asset classes. Although market sentiment toward China remains weak, the latest economic data shows the economy is starting to bottom. We also expect more policy measures to be rolled out in the coming weeks.

Elsewhere, Southeast Asian markets were hurt, given the weaker Asian currencies and commodity prices. However, domestic growth in the region remains strong, providing selective opportunities to investors.

Key indicesSeptember 2023 performanceYTD performance
MSCI AC Asia ex-Japan Index (in USD)-2.68%-0.42%
MSCI China Index (in USD)-2.75%-7.29%
CSI 300 Index (in CNY)-1.96%-2.49%
Hang Seng Index (in HKD)-2.58%-6.82%
Taiwan Stock Exchange Index (in TWD)-1.48%19.73%
MSCI Taiwan Index (USD)-3.78%11.09%
JPM ACI China Total Return Index (in USD)-0.49%-0.65%
JPM Asia Credit Total Return Index (in USD)-0.96%1.26%

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

China/Hong Kong equities

  • US Treasury yields significantly rose following the US Fed’s “higher for longer” message in September. The 10-year Treasury yield rose above 4.5% for the first time since 2007 and even passed the 4.8% mark within days. As a result, the US dollar surged while US equities corrected, especially for the highly valued tech sector. Elsewhere, the Chinese renminbi weakened along with other currencies, limiting the upside of Hong Kong/China equities.
  • Market sentiment in China remains weak, although the latest economic data shows the economy is starting to bottom. The manufacturing PMI recovered to above 50, and industrial production beat expectations. Consumption during the Golden Week also showed strong momentum, although the growth was lower than expected compared to the pre-pandemic level. We believe it will take time for consumers and the market to regain their confidence as the economy bottoms.
  • With the strong US dollar and high US interest rates, liquidity in Hong Kong remains tight, and the high funding costs limit the recovery.

China A-shares

  • As northbound outflows from China A-shares continue, there are speculations that the “national team” (large state-affiliated institutions) is buying the market via onshore ETF creation. Given that sentiment and positioning are at very low levels, the market is set for a recovery should more policies be announced. We believe there will be more measures coming up in the following weeks.

Asia ex-Japan equities

  • Asian markets were also hurt alongside the US markets, as investors refocused again on the probability of a recession next year following the surge in US rates and the US dollar. Correlations among global equities are now at one of the highest levels.
  • Similar to the US, the tech sectors of Taiwan and Korea that previously surged corrected. The weaker Asian currencies and commodity prices also hurt sentiment toward Southeast Asia. That said, domestic growth in the region remains strong.

Emerging market ex-Asia equities

  • The higher US rates and US dollar caused commodity prices to correct significantly, especially oil prices, as investors now worry about slower demand due to higher recession risk. The weaker emerging market currencies also caused concerns.

Japanese equities

  • The Japanese yen surpassing 150 due to the strong US dollar has created suspicion of BOJ intervention. The country’s central bank also entered the market to buy JGBs unscheduled to maintain the yield curve control as yields increased. However, with the weak yen and rising inflation and wages, BOJ is experiencing significant pressure to alter its yield curve control and negative interest rate policies.
  • As the market will closely watch the BOJ October meeting, volatility is expected to remain in the Japanese equity market due to uncertainties surrounding BOJ policy.

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. Given the uncertainties in interest rates, bonds with shorter durations are recommended.

Asia high yield bonds

  • Activities in Asian high yield bonds were dormant due to ongoing concerns over Chinese property developers and shifting demand toward Asian investment grade bonds. Macau is on a brighter spot, as its recovery is on track.

Emerging market debt

  • The significant correction in commodity prices negatively impacted emerging markets. In addition, the higher US rates and strong US dollar hurt investor sentiment toward emerging market bonds as funding costs surged.


  • Momentum turned weak as the longer-end of the Treasury yields surged with the Fed’s “higher for longer” message. The cost of carry is becoming high as the real yield is getting closer to 2%.
  • However, the asset class remains a good hedge against heightened geopolitical risks, especially given the escalating conflict in Israel.


  • 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.

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