Antipodes Asia P (IOF0203AU) Report & Performance

Global equities were higher in July (+2.4%) despite a number of central banks hiking, albeit amidst a dovish shift in tone. Energy, communication services and materials sectors outperformed whilst healthcare, utilities and consumer staples underperformed. US equities were higher (+2.2%) supported by cooling inflation data, despite mixed growth and productivity data. The Fed hiked in line with expectations, with a notable dovish shift in tone to being more data dependant going forward.

European equities slightly underperformed (+1.8%) with economic data weakening and core inflation data remaining sticky. The ECB hiked as expected, however similarly to their US counterparts, promoted a more dovish tone.

Asian equities outperformed (+3.7%). Led by Chinese equities (+7.7%) as the Politburo outlined their commitment to the economy, most notably the property sector.

Whilst more supportive policies have been announced, sentiment remains somewhat muted as the market awaits more substantial stimulus. Japanese equities underperformed broader markets (+1.8%) as the Bank of Japan announced a tweak to its Yield Curve Control policy, declaring greater flexibility will be allowed on the yield before they step into the market to defend it.

Elsewhere, Brent Crude (+14.2% in USD) was stronger, Gold (+2.4%) was up, whilst the US Dollar (-1.0%) was slightly weaker.

Global equities were higher in June (+2.9%) with consumer discretionary, industrials and materials sectors outperforming whilst utilities, healthcare and communication services underperformed.

US equities outperformed (+3.7%) with the Fed pausing hiking for the first time in 15 months, however not without hawkish messaging indicating the potential for further hikes in 2023. Subsequently the yield curve repriced, removing some previously predicted rate cuts. Overall US Economic data has been weakening, however key sectors including services and non-residential construction continue to remain resilient.

European equities were higher (+1.9%) though were impacted by China’s economic reopening data failing to meet expectations. The European Central Bank hiked as expected, whilst the Bank of England and Norges Bank surprised markets with 50bp hikes rather than the anticipated 25bp. Hawkish rhetoric continued within the region, with core CPI remaining sticky and the market pricing in an increased probability of a UK recession.

Asian equities underperformed broader markets (+0.4%) over the month. Chinese equities lagged (-1.0%) with several economic data points failing to meet expectations. The PBOC provided further support through additional policy loosening, however this fell short of market expectations. Japanese equities were higher (+1.2%) with the currency remaining week due continued BOJ yield curve control despite core inflation increasing gradually, albeit at levels below other developed economies.

Elsewhere, Brent Crude (+3.1% in USD) was up from output cuts, Gold (-2.2%) was down, whilst the US Dollar (-1.4%) was weaker.

Global equities were down in USD over the month, however higher in AUD/NZD due to exchange rate impacts (+1.0%) with information technology, communication services and consumer discretionary outperforming whilst energy, materials and consumer staples underperformed. US equities were up (+2.7%) driven by a narrow subset of technology stocks. National politics dominated the headlines, highlighted by the US budget debt ceiling negotiations, with a deal finalised in early June. Whilst the focus on US regional banks subsided, the Fed hiked interest rates as expected, though signalled an increased chance of a pause in June. European equities underperformed (-3.9%) largely led by the UK. In addition, commodity prices and China exposed sectors also saw dampened sentiment. The European Central Bank and the Bank of England both hiked rates as expected with the inflation combatting narrative remaining.

Asian equities outperformed broader markets over the month (+1.6%). Chinese equities were weak (-6.0%) with macroeconomic data disappointing and the property market continuing to weigh on sentiment. Japanese equities outperformed globally and regionally (+4.0%) with strong macroeconomic data and continued easing from the Bank of Japan.

Elsewhere, Brent Crude (-8.7% in USD) was weak, Gold (-1.4%) was down, whilst the US Dollar (+2.6%) was up.

Global equities were up in April (+2.8%) with energy, consumer staples and healthcare outperforming whilst consumer discretionary, information technology and materials underperformed. US equities were higher over the month (+2.6%) with the release of strong purchasing managers’ index (PMI) data, this is despite other prints highlighting broader weakness. Core inflation remained sticky, despite signs of easing, most notably within energy and within the labour market. The regional banking system and uncertainty on the US budget debt ceiling also continued to cause concern. European equities outperformed broader markets (+5.6%) showing resilience despite weaker manufacturing data, with inflation again lower at the headline level as energy pressures eased.

Asian equities underperformed (+0.1%). Chinese equities underperformed globally and regionally (-2.6%) despite solid GDP data, with broader macro data including unemployment and industrial production disappointing relative to reopening expectations. Japanese equities were higher (+1.7%) as the Bank of Japan (BoJ) transitioned governor, with the BoJ maintaining its monetary policy stance, despite announcing a policy review.

Elsewhere, Brent Crude (-0.3% in USD) was slightly lower supported by an OPEC+ output cut, Gold (+1.1%) was up, whilst the US Dollar (-0.8%) was weaker.

Global equities were up in March (+3.8%) with information technology, communication services and utilities outperforming whilst financials, energy and materials underperformed. US equities outperformed broader markets (+4.2%) despite concerns from the Silicon Valley Bank collapse. The Federal Reserve still hiked rates amongst concerns, although accompanied by a more dovish rhetoric as macroeconomic data weakened further. European equities underperformed (+3.1%) impacted by the Credit Suisse takeover over by UBS fuelling wider concerns around the banking sector. The ECB, Bank of England and Swiss National Bank all hiked rates as expected.

Asian equities also outperformed broader markets over the month (+4.4% in AUD) with limited impact from US and European banking sector concerns. Chinese equities underperformed (+3.3%) despite the PBOC cutting the reserve requirement ratio for the first time in 2023 in an effort to further aid recovery. Large technology companies rallied on the government’s show of support for the platform economy over the month.

Japanese equities outperformed (4.7%) as core inflation data rose, with the BOJ continuing its yield curve control policy at least until the end of Kuroda’s tenure. Elsewhere, Brent Crude (-4.9% in USD) was lower, Gold (+7.8%) was strong as a safe haven, whilst the US Dollar (-2.3%) was weaker.

Global equities were down in USD over the month, however higher in AUD/NZD due to exchange rate impacts (+1.5%), with information technology, industrials and financials outperforming and materials, utilities and communication services underperformed.

US equities outperformed broader global equities (+1.9%) with the month beginning with expectations that central banks were nearing the end of the hiking cycle. Resilient economic data, however, caused this narrative to shift, pricing in higher peak interest rates across developed economies, with yields moving higher and equities moving lower. European equities outperformed (+3.8%) despite evidence of strong macroeconomic data and repricing of future central bank rate decisions. The region benefitted from further falls in gas prices, discussions of decarbonisation funding stimulus and flow-on benefits from re-opening in China.

Asian equities underperformed broader markets over the month (-1.5%). Chinese equities were down (-3.7%) as a result of increasing geopolitical tensions and some profit taking after the recent rally. Japanese equities underperformed (+0.5%) as a surprise candidate emerged to lead the Bank of Japan, with the view that monetary policy tightening may be increasingly likely.

Elsewhere, Brent Crude (-2.3% in USD) was lower, Gold (-5.3%) was weak, whilst the US Dollar (+2.7%) was stronger.