Multi-Asset Perspective – Sep 2023


Our investment director and head of Multi-Asset, Kelly Chung, shares her latest insights on different asset classes. In China, there has been significant policy support in the past weeks in the property and financial sectors. We believe the Chinese economy is finding its bottom and expect the recovery will pick up steam in the fourth quarter. With attractive valuations, Chinese equities are also expected to be near their bottom.

Meanwhile, within the fixed income front, Asia investment grade bonds continued to attract inflows due to their attractive yield, while sentiment is improving toward the region’s high yield space.

Key indicesAugust 2023 performanceYTD performance
MSCI AC Asia ex-Japan Index (in USD)-6.41%2.33%
MSCI China Index (in USD)-8.96%-4.66%
CSI 300 Index (in CNY)-6.02%-0.54%
Hang Seng Index (in HKD)-8.23%-4.36%
Taiwan Stock Exchange Index (in TWD)-2.56%21.53%
MSCI Taiwan Index (USD)-4.49%15.45%
JPM ACI China Total Return Index (in USD)-1.02%-0.17%
JPM Asia Credit Total Return Index (in USD)-0.92%2.24%

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


China/Hong Kong equities

  • The Jackson Hole symposium ended up being a non-event as Fed Chair Powell didn’t hint at either side of the policy direction. The market is still split between expectations that it’s already the end of the rate hike cycle or there is one more rate hike in November. Policies will heavily depend on data; thus, the US market’s direction will likely be more uncertain in the near term.
  • The US dollar remains very strong as the market doesn’t expect a rate cut in the US until the middle of next year, especially with Fed members hinting there is not much room for easing in 2024. Meanwhile, the Chinese renminbi continues to weaken as China eases monetary policies, limiting the upside of the Hong Kong/China equities market.
  • In China, there has been significant policy support in the past weeks in the property and financial sectors, including the relaxation of first-time home buyer requirements and mortgage rates in tier-1 cities and the cut in stock stamp duties. There are also targeted tax cuts to support consumption. We believe the Chinese economy is finding its bottom, evidenced by the significant pick-up in home sales in tier-1 cities in the past week following the easing. We expect the recovery will pick up steam in the fourth quarter.
  • The put/call ratio has also decreased significantly in the past week, and with attractive valuations, we believe the stock market is also nearing its bottom.

China A-shares

  • China A-shares registered record Northbound outflows in August since March 2020 as foreign investors unwinded their positions that they built in July. The weakening renminbi also continued to dampen foreign investor confidence.
  • However, sentiment is bottoming and should gradually pick up on the back of the stronger-than-expected policy support from the government and officials’ strong messages about relaxing the property market.

Asia ex-Japan equities

  • As energy and food prices have increased recently, along with an uptick in wage growth in the US, concerns over high inflation are, again, rising. The US dollar has also strengthened, which may dampen sentiment toward Asian equities.
  • That said, Southeast Asia will likely benefit from the pick-up in oil, coal, and food prices.

Emerging market ex-Asia equities

  • The higher oil prices due to OPEC+/Russia’s extended cuts to oil production and the bottoming of base metal prices benefit emerging market ex-Asian equities.
  • However, the tightening in global liquidity, given the higher treasury yields, has made investors more cautious in the near term.

Japanese equities

  • The surprisingly weak Japanese yen provided a tailwind to Japanese equities after some profit-taking in early August. There is a wider expectation that the Bank of Japan (BOJ) will maintain its easy monetary policy in the near future.
  • However, rising inflation and wages continue to put pressure on the BOJ’s commitment to its yield curve control policy. Any changes the central bank makes in the October meeting will likely surprise the market significantly.
  • On the other hand, Japanese earnings have continued to beat expectations with improving ROEs and margins. Dividends and share buybacks have also increased, which are also positive for the market.

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. With expectations that the rate hike cycle is coming to an end, treasury yields have stabilized.

Asia high yield bonds

  • With more support measures in the property sector, China high yield bonds have rebounded and stabilized after the significant correction earlier. With improving fundamentals, other Asia high yield bonds performed well, including Macau and Southeast Asian bonds.
  • However, China high yield property developers are still under significant liquidity stress, and any events of default could impact sentiment.

Emerging market debt

  • The pick-up in commodity prices supported emerging markets. However, the narrower spread between EM bonds and US credit has caused the market to become less attractive.


  • Momentum is getting weaker as the short-end Treasury yield is very attractive.
  • But with the rate hike peaking, the price of gold will remain supported. The asset class also remains a good hedge against heightened geopolitical risks.


  • 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.