Research & Insight

MSCI Asia ex Japan fell by 6.04% in USD in January 2010. Equities were hurt by Chinese policy tightening, the increased risk of Greek debt default and the announcement on US bank regulation. Because of this, various macro drivers were unhelpful such as falling metal and oil prices and rising EMBI spreads, and the rising USD affecting the carry trade. Asian earnings were still being upgraded, but this wasn’t enough to prevent investors reducing their exposure to risky assets including Asian equities.

Too much greed may kill the long history of a Korean Chaebol - Kumho Asiana Group.

China has been focused upon as an exciting destination with attractive growth potential - especially when considering the urbanization story and consumption from the large population. On the other hand, Korea has been viewed less so, it’s image of being a saturated market is perceived as offering little growth potential.

We begin with our view on developed market trends. Lifted by enormous policy supports, the longest and deepest economic downturn since the 1930s appears to have ended. Last quarter saw real GDP growth and it seems likely that the global economy will post another solid increase this quarter. However, growth has yet to produce a shift in private sector behaviour sufficient to generate the job gains that will be necessary for a self sustaining expansion in the developed world.

Global Emerging Markets continue to benefit from the extension of the “risk trade”. In November, the MSCI Emerging Market index rose by 4.3%, outperforming the MSCI AC World index (+3.9%). MSCI Latam led the charge rising by 8.3% over the month, while Asia and EMEA lagged rising by “just” 3.1% and 2.9% respectively.