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For REIT markets in the region, July’s rally lasted until the Jackson Hole meeting in August. The Fed reiterated its hawkish stance in its annual symposium, which sparked a selloff in the region’s markets. Geopolitical tensions also cast a pall on the region’s equities. Most central banks in the region continued to raise rates to keep pace with the Fed and rein in inflation; Thailand and Indonesia raised their respective policy rates for the first time in almost four years to join the list of central banks that are unwinding Covid-induced stimulus measures.
Download the Report Read MoreJuly’s news flow remained challenging, with investors expecting the developed world’s central banks to stay on a protracted hiking cycle and tighten money supply to combat inflation. On the back of the protracted conflict in Ukraine and slowing growth in the US and Europe, outlook for the global economy has also darkened. Meanwhile, data emerged that widespread lockdowns in China to stem Covid infections has strained economic activity in the second quarter. The country’s economy grew just 0.4% in that period – its slowest pace since the coronavirus outbreak two years ago. Still, capital markets in the region rebounded as investors shrugged off the negativity. Equities in the region rose as strong corporate earnings in the US and the expected resumption of Russian gas supply to Europe lifted sentiment.
Download the Report Read MorePlease find below the rebalancing results for the following GPR/APREA index series, which will become effective as of 19 September 2022 (start of trading):
The Fed raised its key benchmark rate by 75 bps in June, to 1.50%-1.75%, to combat inflationary pressures, which reached 8.6% in May, the highest level in over 40 years. Central banks in the region followed suit with hikes in Australia, Taiwan, Hong Kong, India and the Philippines noted. The hawkish stance heightened concerns about a possible US recession, which further clouded capital markets. Yields on 10-year treasuries rose above 3% to peak at 3.5% during the month before falling back. Key sections of the treasury yield curve also inverted as data on US inflation drove traders to boost bets on the pace of Fed tightening. Two-year yields rose above 10-year rates for the first time since April while five-year yields were noted to have surged as much as 17 bps above 30-year rates to record the widest spread in over two decades. Consequently, markets are pricing in a growing risk that the Fed’s bid to engineer a soft landing for the world’s biggest economy are likely to falter.
Download the Report Read MoreConcerns about inflation and slowing economic growth continued to depress capital markets in April. The U.S. reading for inflation hit 8.5% in March, the highest since 1981, recalling an era when interest rates were raised to near 20% under then Fed Chairman Paul Volcker. Markets came under pressure as escalating inflationary pressures are raising the likelihood of more aggressive rate hikes. This pushed the greenback to finish the month near two-decade highs. Monetary authorities in South Korea and Singapore also announced tightening moves. South Korea’s rate decision came after New Zealand delivered a larger-than-expected 50 basis point hike as more central banks across the region made preemptive announcements to shift their focus to fight surging inflation. The recent Covid-19 lockdown of Shanghai also led to concerns about China’s economic growth outlook and the potential for further global supply chain disruptions. With developments clouding global economic prospects, investors endured a torrid April. Total returns from Asia Pacific stocks, as tracked by MSCI, ended in the red. However, the region’s property stocks dealt with the volatility better, recording lower declines to outperform the wider equity market.
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