Multi-asset perspective – June


May was a month of mixed signals from the ongoing global economic recovery, resurging COVID cases and inflationary concerns.

But we continue to be cautiously optimistic in the region and monitor market developments to watch out for recovery plays.


Key indicesMay 2021 performanceYTD
MSCI Asia Ex-Japan Index (in USD)1.22%6.53%
MSCI China Index (in USD)0.77%1.73%
CSI 300 Index (in CNY)4.18%2.52%
Hang Seng Index (in HKD)2.08%8.12%
Taiwan Stock Exchange Index (in TWD)-2.83%16.08%
MSCI Taiwan Index (USD)1.20%18.03%
JPM ACI China Total Return Index (in USD)0.37%-0.93%
JPM Asia Credit Total Return Index (in USD)0.48%-0.55%

 Source: J.P. Morgan, MSCI, Morningstar, Data as of 31 May 2021

China / Hong Kong Equities

  • China’s economic activity remains strong, as indicated by solid Purchasing Managers Index (PMI) numbers.
  • However, the Price Producer Index (PPI) is likely to surge further. We expect companies in the downstream sector to continue to face margin pressure. On the other hand, China’s recent efforts to curb rising commodity prices has caused the materials sector to correct, and the effect on inflation is yet to be seen.
  • The Hong Kong China market is likely to be range-bounded in the near term as earnings revisions have normalized.

China A-Shares

  • Margin trading and northbound flows are picking up again as the market has bottomed. In addition, concerns over liquidity tightening may have been exaggerated, as China government bond yields have been trending down recently.
  • However, a peaking economic recovery and the relatively expensive valuations of A-shares remain to be concerns.

Asia ex-Japan Equities

  • Foreign capital continues to flow out of the region. Investors remain concerned about the economic impact of resurging COVID cases in Asia and the lagging vaccination rates versus developed markets.
  • However, as a result, investors are expecting easier policies from the region, particularly in Southeast Asia.

Emerging Market Ex-Asia Equities

  • Strong commodity prices, particularly in oil and agriculture, continue to support the market, although base metal prices have softened slightly.
  • Markets like Brazil and Russia will likely will continue to enjoy strong economic recovery for the rest of the year.

Japan Equities

  • Investor sentiment was dampened with the resurgence of COVID infections and the extended state of emergency status in major cities.
  • However, vaccination rates have gone up in recent weeks and economic recovery should pick up in the second half of the year.

Asia Investment Grade Bonds

  • The strong PMI and employment data in the U.S. have raised concerns on tapering and higher yields. The market will closely monitor economic data in the coming months and the timing of the Fed to signal tapering will be critical.

Asia High Yield Bonds

  • The disappointing earnings of some Chinese property companies and rising default concerns have caused the Chinese property high yield bond space to correct. This was offset by the rally of industrial bonds as investor preference has shifted.
  • Asian high yield bonds remain relatively attractive compared to U.S. high yield.

Emerging Market Debt

  • The strong PMI and employment data in the US have raised concerns on tapering and higher yields. The market will closely monitor economic data in the coming months and the timing of the Fed to signal tapering will be critical.


  • With the V-shape economic recovery and higher inflation expectation, flows have been focused on industrial commodities, while Gold has experienced one of the biggest outflows year-to-date. However, over the long-term, Gold remains a good hedge against political uncertainties and would benefit from the easing fiscal policies.


  • Multi-asset offers lower volatility compared to traditional single-asset or balanced portfolios. However, the correlation between risk-assets, such as equities, credits, and commodities, has increased dramatically recently. In an uncertain environment with low yields, income becomes an essential source of return for investors.

The author is Kelly Chung, our Senior Fund Manager.

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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.

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