For the Month Ending April 2019

China/Hong Kong

In April, the MSCI China Index returned 2.17% and Hong Kong's Hang Seng Index returned 2.25%, both in local currency terms. China's domestic CSI300, the A share index, returned 1.11% in local currency terms (0.77% in U.S. dollar terms). The renminbi (RMB), ended the month at 6.73 against the U.S. dollar.

Chinese equities rose in April but lost momentum in the latter half of the month as Chinese economic data was stronger than expected. It may seem counterintuitive, but markets interpreted stronger-than-expected data as a potential excuse for China's policymakers to back off stimulative actions put into place earlier this year. The modest increases in spending for infrastructure, combined with lower reserve requirement ratio (RRRs) and value-added taxes (VATs), successfully improved sentiment and helped to boost economic activity year to date. One note of caution is that recent strong economic releases incorporate a slightly extended seasonal Chinese New Year that makes year-on-year data appear slightly stronger than it would be otherwise. Chinese corporate earnings remain relatively robust and valuations continue to be some of the most attractive for emerging markets, even after the year-to-date rally in equity markets.


In April, the S&P Bombay Stock Exchange 100 Index returned 0.11% in U.S. dollar terms (0.50% in local currency terms).

Indian equities were slightly higher in April but underperformed other major Asia markets and broad emerging markets. Small- and mid-cap stocks underperformed their large-cap counterparts. Stocks were somewhat volatile during the month as economic releases were slightly weaker than expected. The Indian central bank (RBI) cut policy rates by 25 basis points (0.25%) early in April and many economists think another cut may occur in June. One potential constraint for further rate cuts could be the recent acceleration in consumer prices and the rebound in oil prices. Oil prices are worth watching as the spike last September helped perpetuate a weaker Indian rupee and fears of higher current account deficits. All eyes are on the national election results, which should be announced late May. Most market participants expect another Modi/BJP-led government.


In April, the Tokyo Stock Price Index returned 1.65% in local currency terms (0.92% in U.S. dollar terms). The yen ended the month at 111.42 against the U.S. dollar.

Japanese equities were broadly higher in April. Strength in other developed markets, especially the U.S., along with stimulative Chinese policy and stronger economic data in the U.S. and China, supported Japanese shares. Japanese stock valuations remain attractive but earnings momentum is still under scrutiny by market participants as profit margins continue to be squeezed by rising fixed costs, including those relating to the higher cost of labor. Interestingly, the first quarter of 2019 saw one of the strongest periods in recent memory for announced stock buybacks, which should support return on equity (ROE) going forward. The new Emperor of Japan took the throne on May 1, 2019.