Matthews Asia
  • Contact Us  |  Careers  |  Change Country:
  • Submit

Matthews Asia Country Updates

For the month ending June 2015

China/Hong Kong

In June, the MSCI China Index returned -5.48%. Hong Kong's Hang Seng Index returned -3.0% (-2.98% in U.S. dollar terms) and China's domestic CSI300, the A share index, returned -7.20% (-7.30% in U.S. dollar terms). China's currency, the renminbi (RMB), ended the month at 6.20 against the U.S. dollar. 

China’s macroeconomic statistics for May highlighted a mixed economic picture. Trade data indicated that both domestic and external demand remained sluggish. Imports contracted for the seventh consecutive month in May and fell 17.6% after dropping 16.2% in April. Exports were down 2.5%, recovering from the 6.4% decline seen in April. Weak exports were largely a reflection of a soft global environment and a strong RMB.

Economic strength was seen in China’s industrial production and the country’s key macro data accelerated in May to 6.1% from 5.9% in April. The industrial production pick up was mainly due to an improvement in fixed asset investment (FAI) growth, which grew 10% in May from 9.6% in April. Among the drivers for FAI growth were recoveries in both manufacturing and property FAI. China’s property sector demonstrated sales recovery over the month and rose 15% in May after growing 7.1% in April.

Elsewhere however, economic weakness was seen in China’s flat retail sales figures, which remained at 10.1% growth in May and 10% growth in April. China’s consumer price index also stayed at low levels and registered a growth of only 1.2% for the month, further declining from April’s 1.5% reading.  

A-share market performance in June was volatile, owing to concerns of an unwinding of the country’s margin finance activities, excessive leverage in the system and worries that upcoming IPOs may result in an oversupply of new shares. The market failed to react positively to the government’s attempt at reviving enthusiasm in the markets. The central bank cut interest rates for the fourth time since November 2014 and reduced the 1-year benchmark deposit rate to 2% from 2.25% and announced a targeted reserve requirement ratio cut by 0.5% for banks meeting certain standards. 


In June, the Indian stock market ended mostly flat amid volatile foreign flows and improving macroeconomic fundamentals. The Bombay Stock Exchange 100 Index corrected by -0.63% in local currency terms (-0.51% in U.S. dollars) amid foreign institutional investor outflows of US$961 million versus year-to-date inflows of US$6.18 billion. Sectors driving the correction have included metal and technology, where concerns on global growth and falling commodity prices may have potentially impacted their expected performance. 

The Wholesale Price Index inflation has been negative for almost six months, and headline inflation data has also been in low to mid-single digits, which prompted the central bank to cut rates by 25 basis points (0.25%), its third cut year-to-date. However, the central bank governor was cautious toward further cuts as there were upside risks to inflation coming from a rebound in global commodity prices and uncertain rainfall. Fortunately, the forecasts for weak rainfall were wrong and the market recovered somewhat. Industrial growth data has also been positive for the past few months, and the Index of Industrial Production grew by 4.1% year-over-year in April, compared to 2.5% year-over-year in March. 

The national government’s progress on reforms has been incremental thus far, with little accomplished on the structural front in June. 


In June, the Tokyo Stock Price Index decreased -2.52% (-0.93% in U.S. dollar terms). Consumer staples and telecommunications stocks were the largest outperformers while consumer discretionary and energy stocks were the largest underperformers. The yen strengthened against the U.S. dollar by 1.82%.

Macroeconomic data was mildly positive. The trade deficit continued to contract, falling by 8.7% due to decreased energy prices, while exports increased by 2.4% from the prior year despite weaker demand for automobiles from China and Europe.

There was also encouraging data from the labor market—the job offers-to-applicants ratio of 1.19 reached its highest level in 23 years, while the seasonally adjusted unemployment rate remained unchanged in May at an 18-year low. 

Inflation figures were once again marginally ahead of expectations in May with the consumer price index, excluding fresh food and energy, rising by 0.4% on an annual basis. This figure is still quite short of the Bank of Japan’s 2% medium-term inflation target.


During the month, the Korea Composite Stock Price Index declined -1.92% in local currency terms and -2.30% in U.S. dollar terms. The Korean won depreciated -0.54% against the U.S. dollar.
In the middle of the month, the Bank of Korea cut its policy rate from 1.75% to 1.50%, after lowering the rate in March. The bank expressed concern over the weak export figures and briefly depressed economic activity that followed news a viral outbreak of the Middle East Respiratory Syndrome (MERS) in the country in June. Korean officials have been able to contain the spread of the disease, and saw incidents waning by month’s end. Korea’s consumer price index for June was 0.7%. Core inflation, excluding effects from energy and food products, stood at 2.2%. 
June saw an estimated trade surplus of US$10.2 billion, leaving the first half of the year to end with a surplus of US$46.7 billion. Exports of petrochemical products and automobiles declined in the first half, due to lowered oil prices and the weak consumer demand from emerging markets, including Eastern Europe and the Middle East. By region, exports to China notably declined due to the country's change in growth strategy toward nurturing its domestic market. Exports to Japan also continued to decline, due to the depreciation of yen. 

Southeast Asia

In June, the MSCI South East Asia Index returned -2.98% in U.S. dollar terms. Notably, the Jakarta Stock Exchange Composite Index (JCI) declined -5.86% in local currency terms (6.85% in U.S. dollar terms). The Stock Exchange of Thailand SET Index advanced 0.57% in local currency terms (0.28% in U.S. dollar terms).

Indonesia’s Central Bank left its benchmark policy rate unchanged at 7.5% and introduced measures to spur growth, such as a relaxation of loan-to-value (LTV) limits for property transactions. LTV limits have been raised by 10% across the board—from 70% to 80% for buyers of first homes; 60% to 70% for second homes; and 50% to 60% for third homes. Home buying regulations, which were first tightened in late 2013, were loosened in a bid to spur economic growth that has decelerated over the last four years. 

Thailand’s headline inflation was -1.27% year-on-year, marking a fifth consecutive month of decline due to lower oil prices. The Bank of Thailand maintained its policy rate at 1.5% and lowered its growth estimate for 2015. The central bank revised down its GDP growth estimate to 3% from 3.8%, based on expectations of slower export growth, tepid private consumption and weak private investment. 

June 2015

The views and information discussed in this article are as of the date of publication, are subject to change and may not reflect the writer's current views. The views expressed represent an assessment of market conditions at a specific point in time, are opinions only and should not be relied upon as investment advice regarding a particular investment or markets in general. Such information does not constitute a recommendation to buy or sell specific securities or investments vehicles.