Markets remained under pressure in April, due to the sharp rise in US Treasury yields and concerns over the latest Covid outbreak in China. Over the month as a whole, the relevant Asian benchmark fell by 5.2% in net USD terms.
Fears over the impact of the lockdown in Shanghai drove a sharp decline in Chinese equities during April. However, the market bounced back at month-end as cases declined and China’s policymakers affirmed their commitment to their GDP growth target. At the top-level Politburo meeting at end-April, officials gave an indication that more stimulus measures would be coming, with a focus on infrastructure investment.
In India, the RBI adopted a more hawkish stance due to now prioritising inflation over growth. At the April MPC meeting, it introduced a new facility that will form a higher floor to the interest rate corridor, ahead of a gradual hiking cycle likely to begin in June.
In Pakistan, PM Khan was forced out of office after he lost a no confidence vote. The new government made encouraging signs that it wants to re-engage with the IMF and extend the financing programme.
We continued to increase our Chinese weighting, through adding JD.com to the portfolio.