Equities 

Source: All data are sourced from Lion Global Investors and Bloomberg as at 30 June 2023 unless otherwise stated. *All figures stated in US Dollars.

Fixed Income

Source: All data are sourced from Lion Global Investors and Bloomberg as at 30 June 2023 unless otherwise stated. *All figures stated in US Dollars.

Macro & Markets

Asia may ease ahead of developed markets

• The US Federal Reserve announced a pause in interest rate hikes during the June meeting but raised their projection to another 50 basis points hike for the rest of 2023. The European Central Bank announced a 25 basis points increase in June as well as a likely hike in July; the Bank of England unexpectedly raised rates by 50 basis points in June. In contrast, Asian Central Banks are pivoting towards easing ahead of the developed markets. Indeed, Vietnam, Sri Lanka and China are already in the easing mode, while Indonesia, Korea, and Philippines are potentially looking to do so.

China’s economic growth stalls

• China’s second quarter economic data in consumption, manufacturing, and exports seems to have stalled. The latest Purchasing Managers’ Index (PMI) showed that China’s manufacturing activity has contracted for three straight months. To markets’ disappointment, there was no major stimulus announced during the State Council meetings in June to rejuvenate the growth engine. All eyes are now on China’s Politburo meeting in July.

Movers & Shakers

Artificial Intelligence (AI) theme continues to dominate the market

• AI-related stocks are the major contributors to the strong performance of the US stock market year-to-date (YTD). Investors are scrambling to identify the beneficiaries of the AI theme, which is often described by commentators to be as transformative as the “industrial revolution”. Most companies are only in early stages of adopting this technology and there can potentially be more winners emerging in the near term.

Foreign investors flock to Japan equities market

• Investors are positive on i) Japan’s exit from deflation, and ii) corporate Japan’s focus on better governance that will drive up shareholders’ value. This is reflected in foreigners buying a record JPY5.5 trillion worth of Japanese equities over the last quarter. We could see more fund flows entering Japan as equity valuations are only near their historical averages.

Geopolitical risk remains an uncertainty

• The visit by US Secretary of State to China was a step in the right direction but unlikely to reverse efforts in the US to de-risk from China. There has also been news of potential new restrictions on US AI chips to China. The reported failed coup by the Wagner group in Russia demonstrated how quickly geopolitical risks can escalate, once again reminding investors the importance of being nimble.

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