Matthews Asia Country Updates

Share This Page:

For the month ending November 2019

China/Hong Kong

In November, the MSCI China Index returned 3.66% and Hong Kong's Hang Seng Index returned 0.10%, both in local currency terms. China's domestic CSI300, the A-share index, returned -1.26% in local currency terms (-1.18% in U.S. dollar terms). The renminbi (RMB), ended the month at 7.03 against the U.S. dollar.

Chinese equities posted higher returns in November as positive sentiment surrounding trade was a catalyst for bargain-hunting. November official PMI releases were better than market expectations and the overall level of the PMI implied a return to economic expansion for the first time since April 2019. The severity of protests in Hong Kong escalated mid-month and the U.S. Congress passed a bill in support of the Hong Kong protesters, both of which created uncertainty for investors later in November. Market participants began to price in decelerating trade tensions and the central government's willingness to support the economy such that current valuations provide a reasonable balance of risk/reward. Importantly, on November 27, 2019, MSCI increased its inclusion factor for locally listed A-shares to 20% from around 5%, which will increase the weighting of Chinese local shares within MSCI global indices and the passive instruments that follow them. Corporate earnings were still being downgraded at the margin but also were stabilizing at lower levels of high single-digit growth for 2019. Next-year consensus earnings for Chinese stocks were higher.

For more on China, please read the latest issue of Sinology.


In November, the S&P Bombay Stock Exchange 100 Index returned 1.10% in U.S. dollar terms (2.10% in local currency terms).

Indian equities posted weaker returns in November after a rebound in October. Macro releases pointed toward lackluster economic activity after India's GDP growth slowed to a 26-quarter low in the third quarter of 2019. The government recognizes the economic slowdown and markets expect the Indian central bank (Reserve Bank of India) to lower repo policy rates on December 5. Most analysts foresee a continued bias toward easier monetary policy in the next three to six months, along with policy measures in support of the economy. Market participants are split between those forecasting continued weakness in sentiment versus those sighting green shoots of stability and improved corporate earnings.


In November, the Tokyo Stock Price Index returned 2.76% in local currency terms (1.42% in U.S. dollar terms). The yen ended the month at 109.49 against the U.S. dollar.

Japanese equities were a bright spot within the region in November, benefiting from de-escalating trade tensions early in the month, a mildly weaker Japanese yen, a stabilizing Chinese economy and relatively robust developed-market stock performance—especially in the U.S. The strong performance of Japanese shares in November seemed to imply that investors were pricing in global economic green shoots and a rebound in corporate earnings. After a strong three months of performance, it would be reasonable to expect Japanese equity prices to move sidewise as markets await clarity in U.S.—China trade negotiations and further evidence that the global economy is stabilizing.

South Korea

In November, the Korea Composite Stock Price Index (KOSPI) returned 0.83% in U.S. dollar terms (1.74% in local currency terms). The Korean won declined by -1.50% against the U.S. dollar.

South Korean equities were some of the weakest in the region in November after being some of the strongest in October and September. Korean economic growth continued to trend lower as trade tensions took a toll on the global economy, which spurred speculation that South Korean policymakers will significantly increase fiscal spending in the 2020 budget. Market participants acknowledged that earnings were downgraded and that current valuations reflected significant bearish sentiment. Equity-yield green shoots started to appear as dividend payouts steadily rose, albeit from a low base.

Southeast Asia

During November, the broader MSCI ASEAN index returned -1.63% in U.S. dollar terms. Southeast Asian countries missed out on the global rally in November and underperformed other Asian markets, as they were neither exposed to the value trade nor a big beneficiary of a U.S.—China trade conflict resolution. The Philippines, Indonesia and Malaysia all registered monthly declines of more than 2% each.

In November, Indonesia's JCI Index slipped and returned -3.70% (-3.45% in local currency terms), as the market reacted to government intervention in various state-owned enterprises, such as PGAS, where a price increase was rescinded. A further setback occurred later in the month when the European Union referred Indonesia to the World Trade Organization (WTO) over nickel ore export curbs that were issued in October 2019. That said, Indonesia allowed nine companies to resume nickel ore exports after inspections into reports of ore export rules violations.

Bank Indonesia (BI) kept the seven-day reverse repo rate unchanged at 5.00%, in line with market expectations. But BI remained dovish, cutting banks' reserve ratio by 50 basis points while keeping the door open for additional monetary easing.

Headline and core inflation moderated to 3.1% year over year and 3.2% year over year in October, lower than consensus estimates. Food prices contracted sequentially for the third-consecutive month, while weak core CPI reflected tepid domestic demand.

In November, Thailand's SET Index returned -0.67% (-0.57% in local currency terms).

The Bank of Thailand (BoT) cut its policy rate by 25 basis points to 1.25%, in line with consensus expectations. The BoT also announced new rules to ease capital outflows in an effort to curb Thai baht strength.

Headline inflation rose just 0.1% year over year in October, far below market expectations and the BoT's 1% to 4% target range. Lower oil prices led to the downside surprise, but core inflation also remained muted, suggesting weak domestic demand. Subdued inflation, weak growth and a persistently strong Thai baht call for further monetary easing.

In November, the Philippines PSEi Index returned -2.85% (and -2.84% in local currency terms). Earnings misses, negative news flow and MSCI rebalancing were drivers of the market weakness.

The Bangko Sentral ng Pilipinas (BSP) kept its policy rate at 4.00%, in line with consensus expectations. Current monetary policy rate settings remained appropriate, given faster GDP growth and additional reserve requirement ratio (RRR) cuts on the horizon.

Headline inflation rose 0.8% year over year in October, in line with consensus expectations (previous: 0.9%). Inflation looks likely to edge higher in the months ahead as high base effects fade, eventually settling within the BSP's 2% to 4% target range.

On the macro front, there were two noteworthy events: 3Q19 GDP beat consensus forecasts, up 6.2% year over year, while the balance of payments (BoP) reached a US$5.7 billion surplus in October 2019, reversing a US$5.6 billion deficit in October 2018. While the resumption of infrastructure spending momentum is likely to whittle down the surplus going forward, it now serves to underpin the stability of the Philippine peso.

Sources: Bloomberg; CEIC

The views and information discussed in this report are as of the date of publication, are subject to change and may not reflect 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 investment vehicles. Investment involves risk. Investing in international and emerging markets may involve additional risks, such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. Past performance is no guarantee of future results. The information contained herein has been derived from sources believed to be reliable and accurate at the time of compilation, but no representation or warranty (express or implied) is made as to the accuracy or completeness of any of this information. Matthews Asia and its affiliates do not accept any liability for losses either direct or consequential caused by the use of this information.