Global equity market continued to move higher in the second quarter of 2017. Europe and UK equity market outperformed US equity market on the back of currency gains, while Asian stock markets beat major developed markets two quarters in a row. In USD terms, S&P 500, DAX, CAC, FTSE 100 and NIKKEI rose 2.57%, 6.80%, 6.66%, 3.57% and 4.96% respectively. Also in USD terms, Hang Seng Index and MSCI AC Asia ex Japan Index gained 6.38% and 7.45% respectively. Strong corporate earnings, receding political risk associated with French Presidential election and lower medium- to longterm US government bond yield resulted from easing expectations on the pace and magnitude of Fed rate hike all helped stock market performance. USD weakened as market expectation on Fed rate hike eased, fallen 7.27% and 3.78% against Euro and Pound Sterling respectively over the quarter. In Asia, stock markets benefited from rising corporate earnings and positive changes in macro backdrop for individual country/region. This includes the election of new President in South Korea led to lower political risk, Hong Kong stock market was boosted by favourable change for Chinese banks. For instance, rising bond yields in mainland China may result in widening in the net interest margin and non-performing loans problem could improve on government efforts to de-leverage.
The above “Market Review” information are provided by Sun Life Asset Management (HK) Limited.