Guide to the Markets Asia - JP Morgan Asset Management Adviser

75 Pages·2016·3.08 MB·English

MARKET INSIGHTS
Guide to the Markets
Asia | 2Q 2019 | As of March 31, 2019
Global Market Insights Strategy Team GTM – Asia | 2
Dr. David Kelly, CFA
New York
Karen Ward
David Lebovitz
London
New York
Tilmann Galler, CFA
Michael Bell, CFA
Dr. Cecelia Mundt Frankfurt
London
New York
Tai Hui
Ambrose Crofton Hong Kong
Gabriela Santos
London
New York Marcella Chow Chaoping Zhu, CFA
Maria Paola Toschi Shanghai
Jai Malhi Hong Kong
Samantha Azzarello London Milan
New York Vincent Juvyns Ian Hui
Luxembourg Hong Kong Yoshinori Shigemi
Alex Dryden, CFA
Manuel Arroyo Ozores, CFA Tokyo
New York Hannah Anderson
Madrid
Hong Kong
John Manley Shogo Maekawa
New York Lucia Gutierrez Mellado Tokyo
Madrid
Agnes Lin
Jordan Jackson
New York Dr. Jasslyn Yeo, CFA Taipei
Singapore
Jennie Li
New York
Kerry Craig, CFA
MeeraPandit Melbourne
New York
Tyler Voigt
New York
Page reference GTM – Asia | 3
Regional and local economy Fixed income
4. Asia: Economic snapshot 43. Global fixed income: Yields and returns
5. ASEAN: Economic snapshot 44. Global fixed income: Market size and government bond yields
6. ASEAN: Monetary and fiscal policy 45. Global fixed income: Yields and risks
7. China: Economic snapshot 46. Global fixed income: Interest rate sensitivity
8. China: Cyclical indicators 47. Global fixed income: Valuations
9. China: Policy stimulus timeline 48. Global fixed income: Return composition
10. China: Monetary policy 49. Global fixed income: U.S. business cycles and yield curve
11. China: Fiscal policy 50. U.S. real yields
12. China: Credit and leverage 51. U.S. investment grade bonds
13. China: Exchange rate and foreign reserves 52. U.S. high yield bonds
53. Emerging market debt
Global economy
14. Global growth Other asset classes
15. Global Purchasing Managers’ Index (PMI): Manufacturing 54. Asset class returns
16. Emerging markets: Development and demographics 55. Volatility
17. Global trade 56. Correlations
18. Global inflation 57. Market performance in drawdowns
19. Central bank policy rates 58. U.S. dollar drivers
20. Central bank balance sheets 59. Currencies
21. Political calendar 60. Emerging market external positions
22. United States: Economic growth and the composition of GDP 61. Oil: Short-term market dynamics
23. United States: Cyclical indicators 62. Commodities
24. United States: Consumer finances 63. Alternative sources of income
25. United States: Business cycle heatmap 64. Understanding alternatives
26. United States: Employment and wages
27. United States: Inflation Investing principles
28. United States: Monetary policy
65. Real return on cash and yields
29. United States: Federal Reserve balance sheet
66. Investors’ market timing
30. United States: Leverage
67. Annual returns and intra-year declines
31. Eurozone: Economic snapshot
68. Fixed income annual returns and intra-year declines
69. The compounding effect
Equities 70. Portfolio construction, asset class returns and volatility
32. Global and Asia equity market returns 71. The benefits of diversification and long-term investing
33. Global equities: Earnings expectations 72. Sustainable investing
34. Global equities: Return composition
35. Global equities: Valuations
36. Global equities: Profit margins
37. Global equities: High dividend
38. Emerging market equities: Performance drivers
39. APAC ex-Japan: Equities snapshot
40. China: Equities snapshot
41. United States: Earnings and returns
42. United States: Bear markets and subsequent bull returns
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Asia: Economic snapshot GTM – Asia | 4
EM Asia* contribution to real GDP growth Investment and exports
dmy Year-over-year change EM Asia* nominal investment,export volumes, y/y change, 3MMA
n
ao 10% 30%
l n Investment Net exports
ao
nc Consumption** GDP
oe 25%
gial
Reoc 8%
l 20%
15%
6%
Investment
10%
4% 5% Export volumes
0%
2%
-5%
-10%
0%
-15%
-2% -20%
'12 '13 '14 '15 '16 '17 '18 '01 '03 '05 '07 '09 '11 '13 '15 '17
Source: CEIC, J.P. Morgan Economic Research, National Statistics Agencies, J.P. Morgan Asset Management; (Right) Netherlands Bureau of Policy Analysis.
*Emerging Market (EM) Asia includes China, Hong Kong, India, Indonesia, Korea, Malaysia, Philippines, Singapore, Taiwan and Thailand. **Consumption includes
both private/household and public/government consumption.
Guide to the Markets –Asia. Data reflect most recently available as of 31/03/19.
4
ASEAN: Economic snapshot GTM – Asia | 5
Exports Consumption growth
dmy Year-over-year change, 6-month moving average Year-over-year change
n
ao 30% 18%
n
l
ao 15%
nc
oe 25% Indonesia Malaysia
gial 12%
ec
Ro 9%
l 20%
Philippines
6%
Philippines
Indonesia
15% 3%
Thailand Singapore
0%
10% -3%
Malaysia
'12 '13 '14 '15 '16 '17 '18
5%
Current account balance
Thailand Share of GDP
0% 25%
Singapore
20%
-5%
15%
Singapore 10% Thailand
-10%
5% Malaysia
-15% 0%
-5% Indonesia
Philippines
-20%
-10%
'12 '13 '14 '15 '16 '17 '18 '19 '12 '14 '16 '18
Source: National Statistics Agencies, J.P. Morgan Asset Management; (Left)FactSet; (Top right)CEIC; (Bottom right) BangkoSentralng Pilipinas, Bank Indonesia,
Bank Negara Malaysia, Bank of Thailand, Statistics Singapore.
Guide to the Markets –Asia. Data reflect most recently available as of 31/03/19.
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ASEAN: Monetary and fiscal policy GTM – Asia | 6
Central bank policy rates* Government deficit or surplus
dmy Per annum Share of GDP
n
ao 7% 3%
l n Singapore
ao
nc
oe 2%
gial Indonesia
ec 6%
Ro 1%
l
0%
Philippines
5% Philippines
-1%
Thailand
-2%
4%
Indonesia
-3%
Malaysia
-4% Malaysia
3%
-5%
-6%
2% Thailand
-7%
1% -8%
'17 '18 '19 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18
Source: BangkoSentralng Pilipinas, Bank Indonesia, Bank Negara Malaysia, Bank of Thailand, FactSet, J.P. Morgan Asset Management; (Right) Bureau of Treasury
Philippines, Ministry of Finance Indonesia, Statistics Singapore.
*The central banks’ policy rates used are: Bank Indonesia 7-day reverse repo rate (Indonesia), overnight policy rate (Malaysia), BangkoSentralng Pilipinasovernight
reverse repurchase facility (Philippines) and one-day repurchase rate (Thailand). Singapore is not included as the Monetary Authority of Singapore targets the
exchange rate of the Singapore dollar to manage monetary policy.
Guide to the Markets –Asia. Data reflect most recently available as of 31/03/19.
6
China: Economic snapshot GTM – Asia | 7
Contribution to real GDP growth Caixin/Markit Purchasing Managers’ Indices
dmy Year-over-year change Level
n
ao 20% 56
n Services 2/2019: 51.1
alo Gross capital formation (investment)
nc 54
oe Consumption
egical 16% Net exports 52
Ro
l GDP
50
12%
2018: 6.6%
48
3/2019: 50.8
Manufacturing
46
8%
'11 '12 '13 '14 '15 '16 '17 '18 '19
Electricity consumption
4% Year-to-date, year-over-year change
21%
2/2019: 10.4%
18%
15%
0%
12% Tertiary
9%
-4% 6%
3%
Secondary
2/2019: 1.2%
0%
-8%
-3%
'80 '85 '90 '95 '00 '05 '10 '15
'11 '12 '13 '14 '15 '16 '17 '18 '19
Source: J.P. Morgan Asset Management; (Left) CEIC, National Bureau of Statistics of China; (Top right) Caixin/Markit, J.P. Morgan Economic Research; (Bottom right)
CEIC, China Electricity Council.
Guide to the Markets –Asia. Data reflect most recently available as of 31/03/19.
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China: Cyclical indicators GTM – Asia || 8
Retail and online sales Fixed asset investment
dmy Year-over-year change, 3-month moving average Year-to-date, year-over-year change
n
ao 12% Retail sales Online sales 50% 40%
n
l
ao 45%
nc
oe 11% 30%
gial 40% State-owned enterprises
Reoc 35% Total Private
l 10% 20%
30%
25%
9% 10%
20%
8% 15% 0%
'16 '17 '18 '19 '11 '12 '13 '14 '15 '16 '17 '18 '19
Industrial profits and PPI inflation Property prices and land sales
Year-to-date, year-over-year change Year-over-year change Year-to-date, year-over-year change
40% 9% 30% 90%
Industrial profits Producer Price Index (PPI)
25% Land area sold* 75%
30%
6% 20% 60%
20% 15% 45%
3%
10% 30%
10%
5% 15%
0%
0% 0% 0%
-3% -5% -15%
-10%
-10% -30%
-20% -6% -15% Residential property prices (lagged 12m) -45%
'11 '12 '13 '14 '15 '16 '17 '18 '19 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
Source: CEIC, National Bureau of Statistics of China, J.P. Morgan Asset Management.
*Land area sold is cut off in 2011 to maintain a more reasonable scale, as growth in land area sold exceeded 90% year-over-year.
Guide to the Markets –Asia. Data reflect most recently available as of 31/03/19.
8
China: Policy stimulus timeline GTM – Asia | 9
2018 and 2019 Chinese policy measures
y
dm
n
ao Monetary policy Fiscal policy Announcements of policy intention
n
l
ao
nc
oe 2018 2019
gial
ec
Ro
l 100bps Politburo of the Central Economic
reserve CPC Central Work Conference
requirement Committee: agreed to even
ratio (RRR) 50bps targeted stability in 6 100bps RRR stronger stimulus 100bps RRR
cut RRR cut aspects needed* cut policies cut
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
1% point cut RMB 1.35 trillion Individual RMB 1.39 trillion Special Cuts in tax,
to value- local government income tax local deductible fee and
added tax special bond cut government items social
(VAT) rate issuance push bond issuance introduced in security
push individual payments
income tax
Source: Various news sources, J.P. Morgan Asset Management.
*CPC is the Communist Party of China and the 6 aspects are employment, financial markets, trade, foreign investment, domesticinvestment and expectations.
Guide to the Markets –Asia. Data reflect most recently available as of 31/03/19.
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China: Monetary policy GTM – Asia | 10
Liquidity injection by the PBoC Reserve requirement ratio
y
dm RMB billions, net injection RMB billions, net injection 22%
n
ao 2,400 600 Large banks
n Open market operation*
alo 20%
nc Monetary policy tools**
oe
gial 2,000 500 18%
ec
Ro
16%
l
1,600 400
14% Small-and medium-sized banks
1,200 300 12%
10%
800 200 '09 '11 '13 '15 '17 '19
Key policy rates
400 100 Per annum
7.5%
Standing lending
0 0 facility (7-day)
6.0%
Lending rate (1-year)
4.5%
-400 -100
3.0%
-800 -200 Interbank repo (7-day)
1.5%
Deposit rate (1-year)
Total, 6-month moving average
-1,200 -300 0.0%
'14 '15 '16 '17 '18 '19 '15 '16 '17 '18 '19
Source: CEIC, People’s Bank of China, J.P. Morgan Asset Management; (Bottom right) National Interbank Funding Center.
*Open market operation includes reverse repo, repo and central bank bill issuance by the People’s Bank of China.
**Monetary policy tools include short-term liquidity operations (SLO), standing liquidity facility (SLF), medium-term liquidity facility (MLF) and pledged supplementary
lending (PSL).
Guide to the Markets –Asia. Data reflect most recently available as of 31/03/19.
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