Market Review April 2025
Risk asset trading volatility heightened across regions on potential additional tariff implementation by US administration. The World index’s decline deepened, falling further by 4.64%. The MSCI Far East Ex. Japan index also declined 2.44%, reversing from February’s 3.37% rise, driven by Taiwan and Korea markets. ASEAN equities outperformed relatively with a return of +0.81% on short covering. Philippines shares (+3.05%) and Indonesia shares (+3.83%) were the top performers. The laggards were Taiwan shares (-10.23%) and Malaysia shares (-3.88%). Regional currencies had a mixed performance against the USD. The best performing currencies were Philippine Peso (+1.27%), Thai Baht (+0.90%) and Singapore Dollar (+0.65%), while the weaker ones were Korean Won (-1.02%) and Taiwan NT (-0.89%).
The US markets saw continued correction on uncertainty economic growth outlook amid the upcoming tariff implementation. The University of Michigan consumer sentiment weakened to 57 in March, well below 64.7 in February. This is the third straight month of lower figure. Dow Jones Industrial Average (DJIA) and S&P 500 and Nasdaq Composite Index declined 4.20%, 5.75% and 8.21% respectively. Technology sector stocks were the hardest hit on relatively higher valuation. The Fed kept the federal fund rate unchanged during the March meeting. The latest annual inflation eased to 2.8% in February from 3.0% one month ago, below the forecast of 2.9%. Presumably, given the prevailing policy implementation uncertainties, the Feb chose to wait for clearer signs of the economy.
The Stoxx Europe 600 Index declined 4.18%, also reversing from a gain last month. The ECB lowered the three key interest rates by 25 basis points, as expected, reducing the deposit facility rate to 2.50%, the main refinancing rate to 2.65% and the marginal lending rate to 2.90%. The rate decision reflects an updated assessment of the inflation outlook and monetary policy transmission. The annual inflation in the Euro zone eased to 2.2% in March, the lowest since November 2024.
Hong Kong and H shares indices posted gains, although much muted from the strong rise seen last month. The market gain was driven by ongoing revaluation of the technology sector on AI theme . For the month, Hang Seng Index and Hang Seng China Enterprises Index gained 0.78% and 1.18% respectively. Chinese A shares chalked up a milder gain of 0.22% amid a weak domestic investors’ sentiment. In the China’s National People’s Congress (“NPC”), the government continued to provide resilient economic outlook and set China’s GDP growth target for 2025 to be around 5%. It expected the consumer price increase in 2025 to be around 2%, and the fiscal budget deficit rate to be around 4%. At a press conference held after the NPC meetings, the Minister of Commerce of China said that this year, China will make every effort to stabilize foreign trade from three aspects: “strengthening policies, expanding growth, and helping enterprises.” It will support cross-border e-commerce and increase the expansion of trade in intermediate products. Meanwhile, continuing focus will be placed on measures to support consumption.
South Korea’s KOSPI Index declined 2.04%. S&P Global revised its 2025 gross domestic product growth forecast for South Korea to 1.2% from 2.0%. The downward pressures on exports due to US tariffs, weak domestic demand and political uncertainty led to the lower forecast. Consumer sentiment in South Korea took a downturn in March following two consecutive months of improvement, weighed down by political uncertainty.
Taiwan’s TWSE Index declined sharply by 10.23%, driven by index heavy counter TSMC on concerns over its capability expansion plan in the US. Taiwan’s consumer confidence weakened to an 11-month low in March amidst growing fears over a possible hike in electricity rates in April, according to National Central University (NCU). Taiwan’s unemployment rate edged up by 0.04 percentage points to 3.34% in February from 3.30% in the month prior, according to data from the Directorate General of Budget, Accounting and Statistics. On the positive, Taiwan’s industrial production rose sharply from a year earlier in February, the 12th consecutive month of year-on-year growth at a time when emerging technologies continue to boost global demand, according to the Ministry of Economic Affairs (MOEA).
Singapore’s STI gained 1.97%. Singapore’s annual inflation rate eased to 0.9% in February 2025 from 1.2% in the previous month, slightly below market expectations of 0.95%. It marked the lowest inflation rate since February 2021. Meantime, the annual core inflation rate edged lower to 0.6% from 0.8% in January 2025, the lowest reading since June 2021. Singapore’s manufacturing production dropped 1.3% Year on year in February 2025, reversing a downwardly revised 8.0% growth in the prior month and missing market consensus of a 7.5% rise. It was the first decline since last June, with electronic output down (-6.4% vs 15.4% in January), weighed by falls in semiconductors and computers.
Malaysia’s KLCI declined 3.88%. Bank Negara Malaysia (BNM) forecast Malaysia’s economy to grow between 4.5% and 5.5% in 2025, driven by sustained domestic demand despite heightened external uncertainties that could moderate export growth. BNM noted that headline inflation and core inflation in 2025 are expected to be benign with favorable domestic conditions expected, and that Malaysia will continue its pursuit of key structural reforms to ensure sustainable growth.
Thailand’s SET Index declined 3.79%. Thailand’s consumer confidence index fell to 57.8 in February 2025 from 59.0 in January, ending four months of improvement due to political instability and a fragile economic recovery. The impact of the second phase of the cash handout remains uncertain, as it began only at end-January and key details are still under review. The central bank warned of slow economic growth this year, citing weak manufacturing and rising import competition.
Jakarta Composite Index recovered and gained 3.83% on short covering as government sought to boost investors’ sentiment with the appointment of prominent international figures as advisors to DANANTARA, its newly established sovereign wealth entity. Indonesia’s consumer confidence fell to 126.4 in February from January’s 127.2 amid weakening purchasing power and shrinking middle class with decline in job availability, economic outlook and income expectation.
The Philippines PSE Index gained 3.05%. Moody trimmed Philippine economic growth forecasts to 5.9% for 2025, slightly slower than its 6% baseline forecast in November 2024, reflecting the impact of uncertainties arising from the United States’ tariff policies. In the just announced US tariffs, imports from the Philippines into the US will be subject to additional tariffs of 18%. Private consumption and investment will be the key driver of growth, supported by a stable inflation and easing monetary policy. Household spending typically accounts for about three-fourths of the Philippine economy.
Vietnam’s VN-Index eked out a small gain of 0.11%. Vietnam signed agreements worth USD4.2bn with US companies to further promote economic, trade and investment cooperation amid tariff risks during the 2025 Vietnam Business Mission hosted by US-ASEAN Business Council. Additional agreements are expected to be negotiated with a potential value of USD36bn. More than 60 US companies including Amazon, Apple, Boeing, JPMorgan, Intel, Nike and Visa participated in the event. In the new US tariffs announced on April 27, 20257, US imports from Vietnam will be subject to tariffs of 46%, among the highest faced by countries in Asia.
Market optimism over the election of Donald Trump as the new US President on expectations that his policies would be positive for the US sparked a recalibration of macro variables and asset allocation decision. However, as a result of concern about the potential impact of his tariff policies, US inflation and interest rate outlook turned less dovish and USD strengthened. The US markets had made good gains in the period following Trump’s election win, but has since undergone major corrections following a host of factors, including the emergence of a rival AI platform in China that appeared to be able to achieve similar results as the likes of ChatGPT with a lot less resource inputs and chip investments, and increasing concerns about the economic and consumer impacts of Trump’s tariff policy.
During his Presidential election campaign, Donald Trump had also pitched to bring about a quick cessation to the Russia-Ukraine war should he be elected. Any adverse change in the US economic growth trajectory, the US inflation outlook and consumer sentiments, with their consequential effect on corporate earnings would have significant impact on the market. Escalation of geo-political conflicts and tensions could also have major adverse impact on the markets. Since his inauguration as US President, Trump has made moves in seeking to bring about a cessation of the conflict in Ukraine. It remains to be seen if and when this will come about, and how it would change the geo-political situation in Europe and elsewhere. An end to the Ukraine conflict would be positive for the equity markets.
We are watchful of geo-political developments as well as policy directions in the major economies, in particular US under a Trump Administration and in China. Following his inauguration, Trump has initiated talks with Ukraine and Russia with the view of getting the adversaries to agree to a temporary cease fire, for a start. So far, that has yet to materialize. Trump is also wasting no time in implementing his tariff policies. His broad and unconventional use of tariff policies can have major and wide reaching impact on both the US and many other countries. It will heighten volatility across markets and weigh on sentiment. The broad sweep of tariff changes were finally announced on April 2, evoking much consternations, both from within and without the US, and triggered significant falls in stock markets worldwide. The US markets were not spared. The full ramifications are yet to be known.
In Asia, the focus is on the pace of China’s economic recovery which has been weaker than expected. The Chinese property sector continues to face severe challenges, and any sign of stabilization and growth will have positive catalyst for China’s economy and risk assets. The Chinese government continues to bring forth various measures to help the economy. In further moves to address the economic situation, the Chinese government announced in September a slew of monetary, fiscal and policy measures to stimulate investment and consumption, enhance liquidity and restore confidence in the property and financial markets. The Chinese government remains constructive on policies to spur economic activities to achieve economic growth target. While the move has boosted market sentiments, the longer- term effectiveness remains to be seen and will be closely watched. It may take time for the initiative to bear fruits. The focus will be on addressing the challenges in the property market, lifting consumer sentiments, and countering the effects of the new US tariffs.
On external trade, countries with high export dependency for growth in the Asia region including ASEAN will face significant challenges arising from the US tariff policies. The disruption in supply chain realignment may result in temporary mismatch in corporate earnings delivery against market expectation during the initial stage of tariff implementation. This can result in further trading volatility for risk assets. Longer-term, higher tariffs may result in corporate margin erosion and slower earnings growth outlook. Consumers may have to pay higher prices, and this translates to higher inflation rate.
While interest rates have started to be eased, there remains headwind for risk assets, including the impact of the still high interest rate on business and economic activities, uncertainties in the US policies post the US Presidential election, the historically high market valuations in the US, the continuing geo-political tension in Europe, Middle East and in East Asia, and the still slower than expected economic growth in China. However, in the investment space we are in, we believe there is room for cautious optimism. After years of prolonged sell down, China equities are under-owned and their favourable valuation offer potential upside, particularly following the recent rounds of significant policy change initiatives from China.
We continue to apply our strategy of focusing on identifying fundamentally healthy companies with low valuations, low leverage, high growth, robust management and a strong track record, and adherence to our investment philosophy of “Never Fully Invest at All Times” which has served us well over the years.
We thank you once again for your continued faith in us, and hope to remain good stewards in our endeavour to protect and grow your capital.
This article is solely for information purposes. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument, investment product or service. The information contained herein does not have any regard to the specific investment objectives, financial situation or particular needs of any person. Investors may wish to seek advice from a financial advisor before making any investment decision. Past performance is not indicative of future results. An investment is subject to investment risks, including the possible loss of the principal amount invested.