Global markets retreated further in October 2023, with Korea, Thailand, and H-Shares posting the largest decline of 7.6%, 6.1% and 4.7% respectively. India was the sole market with a positive gain at 1.5%. Bond indices dropped between 0.7-1.2%.
The US Federal Reserve (Fed) maintained the Fed Fund rate at 5.50%. The Fed and the European Central Bank (ECB) maintained their uncompromising stance on combating inflation. The Fed’s balance sheet shrinkage continued at USD95 billion. We are positive on Asian equities given attractive investment themes and corporates have the potential to post better earnings growth than developed markets. China’s continued pro-policy stance saw some signs of better economic activities, namely stronger than expected GDP growth of 4.9% in 3Q2023 and continued improvement in retail sales in September at 5.5% year-on-year (y-o-y). Within bonds we remain neutral on global developed market fixed income due to the increasing likelihood of keeping interest rate higher for longer by the Fed.
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