Driven by capital inflows into the emerging markets from various sources, EM indexes grew in the early parts of the month, yet still followed global markets and retracted at month end. MSCI Emerging Markets Index rose 7.15% in the month of January.

In line with global markets, European equities went down towards the end of January as a result of worsening market sentiment. The market is further hit by uncertainty surrounding the Brexit aftermath and COVID developments, STOXX 600 fell 0.80% (-1.55% in US$ terms) over the month.

Apart from high yields, most bond indexes across the board fell over the month to start off the year. The shift back to risky assets sent funds out of the safety of fixed income and the sale of assets forced the indexes down. Bloomberg Barclays Global Aggregate, US Investment Grades, and Emerging Markets US Dollar Bonds were down 0.88%, 1.28%, and 0.85%, while US High-yields gained 0.33%

While economic fundamentals and outlook remains precarious, capital inflows to Asia continued, Japanese equities followed the early surge in global equities with sentiments improving, but subsequently fell prey to the correction at the month end. The Nikkei 225 Index was 0.80% higher (-0.60% in US$ terms), while the TOPIX Index also rose 0.23% (-1.16% in US$ terms).

Weekly Insight February 19

Chinese equities were among the best performing assets globally for January, partially due to a stronger economic outlook and capital inflows favouring the market. The Hang Seng Index in particular briefly surged over 10% in the middle of the month, only to retract by the end of January and settled for a 3.87% return. Whereas the CSI 300 Index and Shanghai Composite rose gained 2.70% (4.28% in USD) and 0.29% (1.83% in USD) respectively.

Global markets ended the first month of the New Year on a scrappy note, as multiple opposing factors came into play. Further shaken by the notion of retail investors VS hedge funds, volatility went higher in the wide market. Over the month, the S&P 500 and the Dow were down 1.11% and 2.04% respectively, while the NASDAQ gained 1.42%.

Weekly Insight February 11