Quarterly report
External and Domestic factors drive volatility in APAC
Elevated global economic uncertainty has caused higher volatility across most asset classes over the 3M ending 30 April 2025, adding complexity to an already challenging landscape. Interest rates were kept on hold in Japan, China and Taiwan, while Australia, New Zealand, India and Korea cut. Most currencies strengthened vs. USD, which benefitted returns in USD terms. Bond and equity returns were largely positive.
Key highlights:
- Over the last three months, tariff uncertainty has dominated global markets. APAC markets with strong ties to both China and the US saw additional volatility. On the other hand, domestic demand-driven economies such as India, Indonesia and Philippines have their idiosyncratic stories.
- In fixed income, FTSE APGBI returned 2.1% over 3M but underperformed global peers in FTSE WGBI (5.5%). USD weakness served as a tailwind to performance in USD terms for most markets. Singapore was the best performing government bond market within APAC over 3M, as yields fell following US Treasuries (UST) moves and a more dovish tone from the Monetary Authority of Singapore (MAS). China (+0.3%) was the main laggard in the index over 3M as Chinese yields rose in the absence of signs of further rate cuts by the PBOC. Indonesia (+0.8%) was another laggard over 3M, as Bank Indonesia kept its benchmark interest rate unchanged since January and as the Indonesian Rupiah weakened vs. USD. With the exception of Singapore, APAC government bond spreads to UST broadly widened over the period, as US yields fell on the back of weaker domestic growth expectations.
- In equities, FTSE Asia Pacific rose 2.5% over the last 3M. China rose 9% over 3M, with escalation of US-China trade tensions offsetting the Chinese AI-led Tech rally in February (FTSE China rose 11% in February). Philippines (+16%) outperformed the region as further BSP rate cuts led to a more positive growth outlook. Taiwan lagged (-13%) as Tech stocks sold off amid trade tariffs uncertainty and expensive valuation.
- In foreign exchange, most APAC currencies rose vs. USD over 3M amid USD weakness. JPY led given its safe-haven currency characteristics and BoJ’s rate hike cycle. CNY lagged.
This report, published quarterly, delves into the major macroeconomic, fixed income, equity and FX market events shaping the APAC financial markets, leveraging our exclusive databases and platforms such as FTSE Russell indices across asset classes, LSEG Workspace, Lipper fund flows and many more.
From key market movements to emerging trends, this report provides insights on how those critical drivers impact different asset classes across individual APAC markets. This report also discusses the interplay between the APAC markets and global events, helping navigate the complexities of today’s financial world.
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