Asia Fund – Fund Manager Update

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 to the portfolio.