Market Review March 2026
Risk assets in most markets continued to move higher, albeit cautiously and unevenly. US tariff news took centre stage again during the month. On 20 February, the US Supreme Court came out with its decision on Trump’s emergency tariffs, ruling them as illegal. The markets rallied following that decision. However, days later, Trump announced that the US would impose a new tariff, initially set at 10% and later raised to 15% on US’ global imports. That subsequent news triggered a market sell off. The World Index gained 0.64% in February. The MSCI Far East Ex. Japan index outperformed, gaining 6.60%, driven by North Asia markets, in particular Korea and Taiwan markets. Within the Asia region, ASEAN equities gained +4.09%, led by Thailand (+15.29%) and Philippines (+4.46%) markets. The performance of regional currencies was mixed against the USD. The best performing currencies were Philippines Peso (+2.13%) and Thai Baht (+1.70%), while the weaker ones Vietnamese Dong (-0.42%) and Hong Kong Dollar (-0.13%).
US indices saw rotation positioning as investors shifted bet from mega-cap technology counters in favour of value names. For the month, Dow Jones Industrial Average (DJIA) gained 0.17% whist the S&P 500 Index and Nasdaq Composite declined 0.87% and 3.38% respectively. Economic data remained benign and healthy. The latest consumer price index (CPI) was 2.4%, down 0.3% from previous month and came in below consensus. The Core CPI also dropped 0.1% from prior month, meeting estimates. The labor market added 130,000 jobs and average hourly earnings grew by 0.4% MoM. The unemployment rate was slightly lower at 4.3%.
The Stoxx Europe 600 Index added 3.74% from prior month with energy and communicating services names outperforming. The European Central Bank (ECB) maintained interest rates on hold at 2% as inflation rate stayed subdue. Annual inflation fell to 1.7% in January from 2% in December 2025. The HCOB flash eurozone manufacturing composite PMI index registered a reading of 51.0 in February, up from 51.3 in January, indicating an improving rate of economic expansion. The manufacturing sub-index hit a six-month high of 52.1.
Hong Kong and H shares indices retraced. Hang Seng Index and Hang Seng China Enterprises Index declined 2.76% and 4.91% respectively as weakness in the global technology sector performance drove the major Chinese technology names lower. Homebuyer sentiment in China weakened further. The preliminary presales data of 25 developers from CRIC (China Real Estate Information Corporation) showed a decline of 54% MoM, or -20% YoY. Shanghai has issued another round of property easing policies to support housing demand. As for consumption spending, Chinese consumers boosted their spending by 8.6% in the first four days of this year’s extended Chinese New Year break amid government stimulus measures. Local governments allocated 2.05 billion yuan (HK$2.32 billion) for holiday stimulus measures, such as shopping vouchers, in a bid to revive consumer spending.
South Korea’s KOSPI Index chalked up another strong gain of 19.52% in February, following the 23.42% gain in January. The rise was driven by strong performance of key index counters (Samsung Electronics and SK Hynix) on the back of continued memory prices strength. The Monetary Policy Board of the Bank of Korea (BOK) held the key rate unchanged at 2.5% in its latest rate-setting meeting. It marked the sixth consecutive on-hold decision, even as the central bank remains in an easing cycle. Retail sales in South Korea rose 4.4% in January from a year earlier, driven by strong online sales which increased by 8.2%.
Taiwan’s TWSE Index remained strong, gaining 10.45% on technology sector strength underpinned by positive supply and demand dynamic in the semiconductor industry. Taiwan’s jobless rate declined for a fifth straight month in January, reaching its lowest point in 26 years. The figures highlight the resilience of Taiwan’s labor market at a time of solid export momentum and rising domestic consumption, underlining the island’s broader economic strength. The unemployment rate slipped by 0.01 percentage points from December to 3.29%, while the seasonally adjusted rate remained steady at 3.36%.
Singapore’s STI continued to move higher, gaining 1.83%. Economic activities remained resilient. Singapore’s factory confidence hit a year-high in late 2025, led by a boom in AI chips. While electronics and aerospace sectors are thriving, the chemicals industry is struggling with low profits and too much supply. For early 2026, most companies expect production to stay positive and hiring to remain steady. Singapore’s manufacturing activity reached a 10-month high in January 2026, with the PMI rising to 50.5 and marking half a year of continuous expansion.
Malaysia’s KLCI declined 1.39% on profit taking. (DOSM) Latest update from the Department of Statistics suggests Malaysia’s economy is expected to remain resilient for the second quarter of 2026, supported by increase in the real money supply M1 of 7.3% and real imports of semiconductors of 4.8%. This reflect stable financial stability and sustained demand for electronic components.
Extending a 4.79% rise in January, Thailand’s SET Index gained 15.29% in February on the positive outcome of the country’s general election. The current interim Prime Minister garnered a strong mandate to move the country forward. The S&P Global Thailand Manufacturing PMI eased to 52.7 in January 2026 from 57.4 in December, marking the weakest reading since August 2025. This reflects a slower pace of expansion in output and new orders, mainly due to weaker export demand amid subdued foreign conditions.
Jakarta Composite Index declined 1.13% on continued outflow by foreign investors as Moody maintained Indonesia’s credit ratings at Baa2, its second lowest investment grade. Bank Indonesia kept its benchmark interest rate unchanged at 4.75% for the 5th consecutive meeting in February 2026. Indonesia’s S&P Global Manufacturing PMI rose to 52.6 in January 2026 from 51.2 in the previous month, marking a sixth straight month of expansion in factory activity.
The Philippines PSE Index recovered on bargain hunting, further gaining 4.46%. The Bangko Sentral Pilipinas (BSP) cut its benchmark policy rate by 25bps to 4.25% in February, marking its sixth straight reduction and bringing total easing to 225bps since August 2024. The S&P Global Philippines Manufacturing PMI rose to 52.9 in January 2026 from 50.2 in December, marking the highest level since April 2025. Growth was driven by continued increases in new orders, supported by a renewed pickup in export demand, lifting production back into expansion territory for the first time in five months.
Vietnam’s VN-Index gained 2.80%. Vietnam’s manufacturing PMI fell to 52.5 in January 2026 from 53 in December, the lowest since September, but still indicating a solid monthly improvement in business conditions. Growth was supported by stronger output and new orders, including a rebound in export demand from Asian markets such as India. Employment continued to rise, with hiring accelerating to its fastest pace since mid-2024.
For 2026, the shift of market focus to dovish monetary stance particulary in the US will likely be supportive of risk assets in the near term. The Fed reduced rates by 25 bps in December. However, there is much uncertainty as to whether there will be a further acceleration of reduction in 2026, which if it does, will provide tailwinds into the new year. The market is still divided on impact of higher tariffs on macro variables such as inflation and economic activities. US corporate earnings, especially in the technology sector, continue to be key pillar to hold up risk assets. US market valuations are at historical high, and the high valuation is further driven by strong capital expenditure drive for AI, which has raised questions as to whether the humongous expenditures in AI will generate the anticipated returns. The semiconductor and AI investment cycle may move into a more difficlt phase as investors will start to be more discerning with regard to their return on investment. The supply and demand dynamic in the semiconductor cycle, on the margin, with supply capacity gradually improving at a time when global demand soften on lower GDP growth outlook, can potentially result in headwinds for the industry.
Geo-political developments as well as policy directions in the major economies, in particular US and in China, remain on our radar screen. The market is still watchful of developments in Trump’s tariffs for the key trade partners. Following the US Supreme Court’s just released ruling that the Trump Administration’s reciprocal tariffs are illegal, and the swift follow-up announcement by Trump of his government’s intention to impose a new 15% tariffs on imports, uncertainties remained. The market is also attentive to other US policy pronouncements that would have major fiscal, financial and economic implications. Investors, by and large, appear to be comfortable with Trump’s “Big Beautiful Bill” that has been signed into law, notwithstanding that it will substantially increase US federal deficit and government debt. Meanwhile, new geo-political fissures have opened up with the recent US military raid and capture of Venezuela President, Nicolas Maduro Moros, and the repeated utterings by President Trump of his intention to bring Greenland within the US fold, militarily if necessary. Adding to these is the flare up of the military conflict between the US/Israel and Iran that threaten to engulf the entire Middle East and choke the supply of crude oil and natural gas from the region to the world. These developments further hightened tension in global geo-politics. In the near term, the US mid term election to be held in the later part of 2026 may change the balance of power in the US Congress, and have significant impact on US policies in the remaining years of Trump’s term. These developments will create uncertainities for investors.
In Asia, the focus is on the pace of China’s economic recovery which has been weaker than expected. The tariff issues with the US and continuing efforts to broaden restrictions on sales of tech equipment and services to Chinese entities can only exacerbate the economic situation in China. The Chinese property sector continues to face 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 measures to help the economy. The Chinese government remains constructive on policies to spur economic activities to achieve economic growth target. The various measures have boosted market sentiments. However, the longer- term effectiveness on China’s economy continues to be closely watched. It may take time for the initiatives to bear fruits. The focus will be on addressing the challenges in the property market, lifting consumer sentiments and consumption, 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. To-date, while ASEAN countries’ exports to the US have been impacted by the tariffs, these countries have been able to mitigate the impact on the economic growth through trade diversifications.
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 US policies, the historically high market valuations in the US, the geo-political tension in various parts of the World, 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, and despite the upticks in recent months, China equities are under-owned and their favourable valuation offer potential upside, particularly following the recent rounds of significant policy change initiatives from China. Also, the prospect of further softening of the US dollar could see increasing funds flow out of US assets which could be beneficial for emerging markets including China and ASEAN.
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.