The Multi-Asset Perspective – November


Trump’s potential refusal to concede, uncooperative response, and the Senate’s election outcome could spike the near-term market volatility, as one could observe an overly bullish market response in the recent days.


Key indicesOctober performanceYTD
MSCI Asia Ex-Japan Index (in USD)2.8%8.4%
MSCI China Index (in USD)5.4%22.0%
CSI 300 Index (in CNY)4.1%21.6%
Hang Seng Index (in HKD)2.7%-11.4%
Taiwan Stock Exchange Index (in TWD)0.2%8.1%
MSCI Taiwan Index (USD)1.3%16.0%
JPM ACI China Total Return Index (in USD)0.0%4.9%
JPM Asia Credit Total Return Index (in USD)-0.1%4.3%

Source: J.P. Morgan, MSCI, Morningstar, Data as of 30 October 2020


China / Hong Kong Equities

  • The world is waiting for the outcome of the U.S. presidential election. The officials are pending the final results and will make them available days after the Election Day the earliest. The outstanding ballot tilts toward a Biden Administration and the Congress under split-party control. The political scene configured this way would relieve the market as one could anticipate less uncertain Sino-U.S. relations and minimal changes to the U.S. tax and regulations in the next two years.
  • Liquidity is ample given Ant Group’s $37 billion IPO is on hold; interested investors’ money is seen flowing back to other e-commerce or internet stocks.

China A-Shares                                                         

  • A stabilizing SHIBOR and falling margin trading maintenance ratio provided support to the market while the economic recovery continues to be strong.
  • Under a Biden Administration, less uncertain Sino-U.S. relations is assumed. All of the above is good news for the market. However, China A-shares valuation remains demanding and a smaller fiscal package from the U.S. would lessen the extent of the U.S. dollar weakening than predicted earlier. A potential reversal in the RMB strength may hinder the market, although the currency correction would not be of an immense magnitude.

Asia ex-Japan Equities

  • Foreign capital started to flow back to Asia, posting an inflow for the past five consecutive weeks. Institutional money began to flow to Southeast Asia, given their lagging performance year to date. As the uncertainties caused by the U.S. election diminish, it would foster investor sentiment in Asia. However, the severe COVID situation in some Southeast Asia countries and Taiwan’s political risk remain key to monitor.

Emerging Market ex-Asia Equities

  • After some good runs, oil and industrial metal prices started to reverse technically. Given their sensitivity to commodity prices, EM ex-Asia markets will be subject to some reversals.
  • A split Congress in the U.S. will make the rotation to value more difficult to materialize. This would hinder the performance of EM ex-Asia as they are more value-biased.

Japanese Equities

  • The valuation of Japanese equities remains elevated despite a lack of improvement in the economy and fundamental
  • A lighter level of risk aversion globally post U.S. election and the entry to the holiday season would somewhat improve the Japanese market sentiment.

Asia Investment Grade Bonds

  • With the diminishing hope for a big fiscal stimulus package, there is hope for the Federal Reserve to extend the asset purchase and the yield curve steepening scenario would become less likely. This bolds well for investment grade bonds as they are more rate sensitive. However, valuation remains expensive given the already-tight spread.

Asia High Yield Bonds

  • The stronger earnings sentiment in the region will continue to lend support to Asian high yield bonds. Also, declining CDS in Asia such as China, Indonesia and Korea, given the lower global risk aversion, is also beneficial to the Asian high yield bond market.

Emerging Market Debt

  • Oil and industrial metal prices likely soften, given the lessened likelihood of infrastructure spending. However, the lower risk aversion would propel the money to flow back to EMD, given the Fed fund rates will be lower for longer.


  • Gold has been a good hedge against uncertainties. The massive monetary easing and fiscal deficit prove to be adverse to the USD and reflationary in the longer term, supporting gold demand. However, with lower global risk aversion, Gold will remain in a consolidation range in the near term.


  • Multi-asset offers a lower volatility level compared to a traditional single asset or a balanced portfolio. 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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