Monthly Market Review Jun 2020 · For policymakers, they can breathe a sigh of relief that the...

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Monthly Market Review MARKET INSIGHTS June 2020 Stages, sequencing and selection The risk of injury is what professional athletes need to face. A torn ligament or a broken bone can take months to heal. The rehabilitation process can be described in two stages. The first stage is to repair the injured body part and allow the athlete to regain some basic body functions, such as being able to walk again. This could happen in a matter of a few weeks, even days. Then the long road of rehabilitation begins for the athlete to get back to full fitness and peak condition. This could take months, and the athlete may not even return to his or her peak after the recovery. The global economy is in a similar two-stage recovery process. We are probably at the start of the first stage of recovery from COVID-19’s debilitating injury and getting back to some form of normality. Yet, the second stage of returning to full fitness is likely to be a long process and requires sustainable medical solutions, such as a widely distributed vaccine, or at least an efficient and accurate testing process. Getting back on its feet The April Purchasing Managers’ Index (PMI) for both manufacturing and services probably marks the lows in economic activities in this pandemic-induced recession due to full lockdown in Europe and severe social distancing measures in other parts of the world. The flash PMI data for May in the U.S. and Europe are already reflecting the bottoming out of economic activities. After contracting by 6.8% in the first quarter of the year, China’s economic activities are also picking up according to April’s economic data. In the U.S. and Europe, their economies were already in contraction in the first quarter, compared with the previous quarter. The second quarter is expected to be worse, reflecting the full impact from the lockdown. COVID-19 was powerful in shutting down the services sector, like food and beverages, entertainment, travel and leisure, and brick and mortar retail. These industries make up a sizable share of the developed world’s economy. Coming to a standstill means the U.S. economy could see activity drop by 20%-30% in the second quarter, compared with the previous quarter. The U.S. unemployment rate hit 14.7% in April, with 20.5 million jobs lost. With new infection cases coming down in Asia, Europe and the U.S., governments are allowing businesses to re-open gradually. Most governments are approaching this with great care since everyone wants to avoid a second wave of infections. There are some lessons learnt from China’s recovery process in recent months.

Transcript of Monthly Market Review Jun 2020 · For policymakers, they can breathe a sigh of relief that the...

Page 1: Monthly Market Review Jun 2020 · For policymakers, they can breathe a sigh of relief that the economy has bottomed. They have stopped the bleeding, but it could be another several

Monthly Market Review

MARKET INSIGHTS

June 2020

Stages, sequencing and selection

The risk of injury is what professional athletes need to face. A torn ligament or a broken bone can take months to heal. The rehabilitation process can be described in two stages. The first stage is to repair the injured body part and allow the athlete to regain some basic body functions, such as being able to walk again. This could happen in a matter of a few weeks, even days. Then the long road of rehabilitation begins for the athlete to get back to full fitness and peak condition. This could take months, and the athlete may not even return to his or her peak after the recovery.

The global economy is in a similar two-stage recovery process. We are probably at the start of the first stage of recovery from COVID-19’s debilitating injury and getting back to some form of normality. Yet, the second stage of returning to full fitness is likely to be a long process and requires sustainable medical solutions, such as a widely distributed vaccine, or at least an efficient and accurate testing process.

Getting back on its feet

The April Purchasing Managers’ Index (PMI) for both manufacturing and services probably marks the lows in economic activities in this pandemic-induced recession due to full lockdown in Europe and severe social distancing measures in other parts of the world. The flash PMI data for May in the U.S. and Europe are already reflecting the bottoming out of economic activities. After contracting by 6.8% in the first quarter of the year, China’s economic activities are also picking up according to April’s economic data.

In the U.S. and Europe, their economies were already in contraction in the first quarter, compared with the previous quarter. The second quarter is expected to be worse, reflecting the full impact from the lockdown. COVID-19 was powerful in shutting down the services sector, like food and beverages, entertainment, travel and leisure, and brick and mortar retail. These industries make up a sizable share of the developed world’s economy. Coming to a standstill means the U.S. economy could see activity drop by 20%-30% in the second quarter, compared with the previous quarter. The U.S. unemployment rate hit 14.7% in April, with 20.5 million jobs lost.

With new infection cases coming down in Asia, Europe and the U.S., governments are allowing businesses to re-open gradually. Most governments are approaching this with great care since everyone wants to avoid a second wave of infections. There are some lessons learnt from China’s recovery process in recent months.

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The sequencing of recovery is noteworthy, since other economies may face a similar development. Factories and workplaces can open first because it is relatively easier to screen staff for a fever or potential symptoms. Some consumer services are alsoreturning. However, consumers are less comfortable with crowded spaces, such as air travel, cinemas or concert halls.

A similar pattern is emerging in other economies, and businesses are trying to find ways to cope with the new conventions. Social distancing rules and preferences mean restaurants may need to space their tables further apart. Sports events, such as in Germany and South Korea, are held in empty stadiums. Governments are discussing ‘travel bubbles’, where locations with low infection rates can allow their people to travel without stringent quarantine requirements.

Now comes the hard part

The first stage of recovery is bringing some normality back to our lives, and this would be reflected in growth data in the months ahead. Once these low hanging fruits are picked, achieving the second stage of returning to full health will be more challenging. To get back to where we were in December 2019, a widely distributed vaccine, accurate and efficient testing or contact tracing will be needed. The potential return of another round of infections in the northern hemisphere in autumn could also be a challenge.

This second stage of recovery also needs to take into account two things. First, some of the economic damages may be permanent. If firms are forced to close, their employees will not have a job to return to when things start to improve. Also, fresh economic risks could rise. The return of U.S.-China trade tensions is an old foe that investors need to pay more attention to again.

For policymakers, they can breathe a sigh of relief that the economy has bottomed. They have stopped the bleeding, but it could be another several quarters before we get to this second stage of recovery. This means developed market central banks are likelyto keep their policy rates close to zero for an extended period of time. They may ease back on asset purchases but unwinding their balance sheets is going to be difficult, especially when governments may need to provide more rounds of stimulus to support households and businesses before we get back on a stronger growth track.

Select by focusing on the recovery sequence

Despite the worst recession since the Second World War, the equity market has been in a cheery mood. The S&P 500 is up 35% from its low in March. One key difference with this recession is that we know precisely when it started. Moreover, the globaleconomy has very likely seen the worst of this downturn. However, getting back on its feet is the easier part. Returning to fullfitness is going to be more challenging.

Markets are celebrating this first stage. Aggressive medicines from governments and central banks to support the economy alsohelp to numb the pain. Both the equity and corporate credit markets have quite accurately reflected the varying degree of recovery by sector. For example, technology, health care and consumer staples have outperformed, while energy, airlines and travel are still in a tough spot. Investors will need to monitor the next stage of recovery, as well as take into account new threats to global growth, such as geopolitical uncertainties.

We think fixed income should continue to be the core of portfolio allocation at this point. Having passed the worst, investors could look for more risks in high yield corporate credits. Default rates are still likely to rise but historically, high yield corporate credit spreads typically peak before the peak is in default. That said, depressed energy prices and a gloomy outlook in discretionary consumption mean investors will still need to choose carefully in this space. Emerging market fixed income, despite the strong U.S. dollar, has also performed well. We think investors can pay more attention to Chinese fixed income. International participation in the Chinese fixed income market is still low. It can also be a rich source of yields in an income-seeking world.

This hunt for income and yield would also benefit high dividend equities. The weaker earnings outlook is clearly a challenge, but investors can still find sectors with stable dividend payouts and less government interference. Following the outperformance of the technology and health care sectors, industrial and consumer discretionary sectors could attract attention given they could benefit from this stage of the recovery. For sectors with very cheap value, such as energy and financials, we may need to wait for signs of the second stage of recovery to act as a catalyst.

MONTHLY MARKET REVIEW

MONTHLY MARKET REVIEW | JUNE 2020

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3J.P. MORGAN ASSET MANAGEMENT

MONTHLY MARKET REVIEW | JUNE 2020

Global economy:

• The May flash PMIs for G4 economies show a bounce in economic activities, even though the level is still significantly below 50, indicating that manufacturing and services are still in contraction. With a decline in new infections, most European countries are looking to reopen their economies in May and June, even though significant social distancing policies are still in place. The U.S. is also expected to gradually reopen its economy, which hopefully would help the labor market. (GTMA P. 15, 30)

• Developed market central banks have taken a pause in monetary easing, following aggressive actions in March and April. In contrast, emerging market central banks, such as Brazil, India and Turkey, cut their policy rates to support growth. Many of these emerging market countries are still facing a high number of infections, but their economies cannot afford a prolonged shutdown. (GTMA P. 21)

Equities:

• After the strong rebound in April, global equities maintained momentum in May. The S&P 500 was up 7.5% and the NASDAQ up 10.3%. The Stoxx50 was up 4%. The ongoing corporate earnings downgrade is starting to stabilize for 2021, but the general consensus is that we will not return to 2019 earnings level in most developed markets by 2021. (GTMA P. 34, 37)

• May was more challenging for Asian markets. Singapore and India are impacted by the ongoing COVID-19 pandemic. Hong Kong equities underperformed the region (down 6.8% in May) due to the rise in political tensions between the U.S. and China and also uncertainties from domestic politics. Domestic developers, tourism-related services and financials were particularly hard hit in Hong Kong. (GTMA P. 34, 42)

Fixed income:

• U.S. Treasury (UST) yields were broadly stable during May as the Federal Reserve (Fed) kept its policy largely unchanged. The 10-year yield was only up 7bps in the month and the slope of 2-year to 10-year yield steeped by 10bps. With the Fed unlikely to adopt negative policy rates, but maintain asset purchases to keep the long end steady until the economy recovers, we could see UST yields trapped in a range in the months ahead, especially in the short to mid section of the yield curve. (GTMA P. 47, 50)

• U.S. investment grade and high yield corporate credit spreads narrowed by 19bps and 120bps, respectively, in May. Investors are starting to feel more optimistic about the prospects of the economy reopening. However, the energy and leisure sectors continue to be challenging. Despite the strength in the U.S. dollar (USD) and the high number of new infections in markets such as Brazil, India and Russia, emerging markets debt also generated strong returns, especially in USD-denominated debt in May on the back of spread compression. (GTMA P. 47, 49, 56, 57, 59)

Other assets:

• Oil has rebounded back to USD 35pb (for West Texas Intermediate) with some early signs of the global economy bottoming out with lockdown being eased around the world. Saudi Arabia is also offering to cut supply by another one million barrels per day. That said, the prospects of oil prices returning to a more sustainable range of USD 50-60pb is still not optimistic since the market still needs to digest all the crude oil in storage, and the long road for oil consumption to return to pre-pandemic level. Gold remained range bound along with bond yields with the price of gold stuck between USD 1700 and USD 1750 per ounce. (GTMA P. 67, 68)

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2025303540455055606570

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

-20%

-10%

0%

10%

20%

30%

40%

50%

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

SecondaryTertiary

Contribution to real GDP growthYear-over-year change

Caixin/Markit Purchasing Managers’ IndicesLevel

Electricity consumptionYear-to-date, year-over-year change

Source: J.P. Morgan Asset Management; (Left) CEIC, National Bureau of Statistics of China; (Top right) Caixin/Markit, J.P. Morgan Economic Research; (Bottom right) CEIC, China Electricity Council.Guide to the Markets – Asia. Data reflect most recently available as of 31/05/20.

Net exports

Gross capital formation (investment)

Consumption

GDP

Secondary

Tertiary

4/2020: -8.1%

4/2020: -6.1%

Manufacturing

Services 5/2020: 55.0

China: Economic snapshot

Year-to-

date 2020:

-6.8%

5/2020: 50.7

GTM - Asia 7

-8%

-4%

0%

4%

8%

12%

16%

20%

'80 '85 '90 '95 '00 '05 '10 '15

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Source: Australian Industry Group, Institute for Supply Management, J.P. Morgan Economic Research, Markit, J.P. Morgan Asset Management.PMIs are relative to 50, which indicates deceleration (below 50) or acceleration (above 50) of the sector. Heatmap colors are based on PMI relative to the 50 level, with green (red) corresponding to acceleration (deceleration). *Developed market includes Australia, Canada, Denmark, Euro area, Japan, New Zealand, Norway, Sweden, Switzerland, UK and U.S. **Emerging market includes Brazil, Chile, China, Colombia, Croatia, Czech Republic, Hong Kong SAR, Hungary, India, Indonesia, Israel, Korea, Malaysia, Mexico, Philippines, Poland, Romania, Russia, Saudi Arabia, Singapore, South Africa, Taiwan, Thailand, Turkey and Vietnam. Guide to the Markets – Asia. Data reflect most recently available as of 31/05/20.

Global manufacturing and services PMIIndex

Global manufacturing PMI breakdown

Manufacturing

Services

Global Purchasing Managers’ Index (PMI) GTM - Asia 15

Ju

n '19

Ju

l '1

9

Au

g '19

Sep

'19

Oct

'19

No

v '19

Dec '19

Jan

'20

Feb

'20

Mar

'20

Ap

r '2

0

May '20

Global 39.6 42.4

DM* 36.8 39.5

EM** 42.7 45.4

U.S. (Markit) 36.1 39.8

U.S. (ISM) 41.5 43.1

Euro area 33.4 39.4

Germany 34.5 36.6

France 31.5 40.6

Italy 31.1 45.4

Spain 30.8 38.3

UK 32.6 40.7

Australia 44.1 44.0

Japan 41.9 38.4

China (Markit) 49.4 50.7

China (NBS) 50.8 50.6

Korea 41.6 41.3

Taiwan 42.2 41.9

Indonesia 27.5 28.6

India 27.4 30.8

Russia 31.3 36.2

Brazil 36.0 38.3

Mexico 35.0 38.3

# markets above 50 6 3 6 6 6 5 7 7 7 3 0 1

30

35

40

45

50

55

60

65

'99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19

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Source: J.P. Morgan Asset Management; (Left) FactSet; (Right) BIS. G4 are the Bank of England, the Bank of Japan (BoJ), the European Central Bank and the U.S. Federal Reserve. *Key deposit rates that central banks charge commercial banks on their excess reserves. **The BoJ has adopted a three-tier system in which a negative interest rate of -0.1% will be applied to the policy rate balance of the aggregate amount of all financial institutions that hold current accounts at the BoJ. ***Count covers the 38 central banks included in the Bank for International Settlements’ central bank policy monitor. Year-to-date data reflect most recently available as of 28/04/20. Past performance is not a reliable indicator of current and future results.Guide to the Markets – Asia. Data reflect most recently available as of 31/05/20.

Policy rateDeposit

rate*

Eurozone 0.0% -0.5%

Japan** -0.1 to 0.0% -0.1%

UK 0.1% 0.1%

U.S. 0.0 to 0.25% 0.1%

Changes in central bank policy ratesNumber of hikes or cuts***

G4 central bank key policy ratesPer annum

Central bank policy rates

Developed markets

Emerging marketsRate hikes

Rate cutsDeveloped markets

Emerging markets

GTM - Asia 21

-200

-150

-100

-50

0

50

100

150

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 YTD'20

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0

25

50

75

100

ConsumerConfidence

WageGrowth

NonfarmPayrolls

HousingStarts

Light VehicleSales

BusinessConfidence

Capex DurableOrders

IndustrialProduction

LeadingEconomic

Index

CreditConditions

Example

Source: BEA, Conference Board U.S., FactSet, U.S. Census Bureau, U.S. Department of Labor, Wards Intelligence, J.P. Morgan Asset Management.Indicators are: Consumer Confidence – Monthly survey index of how consumers perceive their own financial status and the general economy; Wage Growth – Average hourly earnings of production and non-supervisory workers; Nonfarm Payrolls – Monthly change in U.S. nonfarm employment (three-month moving average); Housing Starts – Number of private housing units that construction has started within a specified timeframe; Light Vehicle Sales – Cars and passenger trucks sold in a given month; Business Confidence –Monthly survey of Chief Executive Officers about their outlook for the economy; Capex – Monthly new orders of non-defense capital goods (excluding aircraft); Durable Orders –Monthly new orders of durable goods in the manufacturing sector, seasonally adjusted; Industrial Production – Monthly output of the industrial sector; Leading Economic Index – An index aggregating values of 10 key variables intended to forecast future U.S. economic activity; Credit Conditions – Leading Credit Index that aggregates performance of six financial market instruments to track credit conditions in the U.S. economy. Guide to the Markets – Asia. Data reflect most recently available as of 31/05/20.

U.S. business cycle indicatorsCurrent percentile rank relative to range of data since Jan. 1990

United States: Business cycle thermometer

Consumers Businesses

3

months

ago

Latest ElevatedR

etrenched

GTM - Asia 28

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8

20

25

30

35

40

45

50

55

60

65

'10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Source: FactSet, J.P. Morgan Asset Management; (Left) J.P. Morgan Economic Research, Markit; (Top and bottom right) Eurostat; (Bottom right) European Commission. PMIs are relative to 50, which indicates contraction (below 50) or expansion (above 50) of the sector. Core CPI is defined as CPI excluding food and energy prices. *Services component of Italy’s Composite PMI for May 2020 is not available as of 31/05/20.**Eurozone consumer confidence as reported by the European Commission, which measures the level of optimism that consumers have about the economy in relation to prior months and is typically below zero. Guide to the Markets – Asia. Data reflect most recently available as of 31/05/20.

Consumer confidence** and retail salesYear-over-year change, 3-month moving average Index

Retail sales

Consumer confidence

Eurozone PMIsIndex, 3-month moving average

ECB inflation target: 2%

Eurozone: Economic snapshot

Eurozone CPI inflationYear-over-year change

Core CPI

Headline CPI

May ’20

Eurozone Manufacturing PMI –

New Export Orders28.7

Germany Composite PMI 31.4

France Composite PMI 30.5

Italy Composite PMI* (Apr ’20) 10.9

GTM - Asia 33

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Source: FactSet, MSCI, Standard & Poor’s, J.P. Morgan Asset Management.Returns are total returns based on MSCI indices, except the U.S., which is the S&P 500, and China A, which is the CSI 300 index in U.S. dollar terms. China return is based on the MSCI China index. 10-yr total (gross) return data is used to calculate annualized returns (Ann. Ret.) and annualized volatility (Ann. Vol.) and reflect the period 31/05/10 – 31/05/20. Past performance is not a reliable indicator of current and future results. Guide to the Markets – Asia. Data reflect most recently available as of 31/05/20.

Global and Asia equity market returns GTM - Asia 34

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q '20 YTD '20 Ann. Ret. Ann. Vol.

ASEAN U.S. India U.S . China A Ja pa n Ta iwa n China U.S . Ta iwa n China U.S . U.S . China A

3 2 .4 % 2 .1% 2 6 .0 % 3 2 .4 % 5 2 .1% 9 .9 % 19 .6 % 5 4 .3 % - 4 .4 % 3 7 .7 % - 10 .2 % - 5 .0 % 13 .2 % 2 4 .5 %

Kore a ASEAN China Ja pa n India China A U.S . Kore a India China A China A China Ta iwa n India

2 7 .2 % - 6 .1% 2 3 .1% 2 7 .3 % 2 3 .9 % 2 .4 % 12 .0 % 4 7 .8 % - 7 .3 % 3 7 .2 % - 11.6 % - 5 .0 % 9 .5 % 2 2 .8 %

Ta iwa n Europe ASEAN Europe U.S . U.S . Kore a India Ta iwa n U.S . Ja pa n Ja pa n Ja pa n Kore a

2 2 .7 % - 10 .5 % 2 2 .8 % 2 6 .0 % 13 .7 % 1.4 % 9 .2 % 3 8 .8 % - 8 .2 % 3 1.5 % - 16 .6 % - 6 .9 % 6 .2 % 2 0 .6 %

India Kore aAPAC

e x- JPTa iwa n Ta iwa n Europe

APAC

e x- JP

APAC

e x- JPASEAN Europe Ta iwa n China A China China

2 0 .9 % - 11.8 % 2 2 .6 % 9 .8 % 10 .1% - 2 .3 % 7 .1% 3 7 .3 % - 8 .4 % 2 4 .6 % - 19 .0 % - 7 .7 % 5 .9 % 2 0 .3 %

APAC

e x- JPJa pa n Kore a Kore a China India ASEAN China A Ja pa n China U.S . Ta iwa n Europe Europe

18 .4 % - 14 .2 % 2 1.5 % 4 .2 % 8 .3 % - 6 .1% 6 .2 % 3 2 .6 % - 12 .6 % 2 3 .7 % - 19 .6 % - 9 .9 % 5 .8 % 17 .1%

Ja pa nAPAC

e x- JPEurope China ASEAN Kore a Ja pa n ASEAN

APAC

e x- JPJa pa n

APAC

e x- JP

APAC

e x- JP

APAC

e x- JP

APAC

e x- JP

15 .6 % - 15 .4 % 19 .9 % 4 .0 % 6 .4 % - 6 .3 % 2 .7 % 3 0 .1% - 13 .7 % 2 0 .1% - 2 0 .7 % - 13 .2 % 5 .5 % 16 .9 %

U.S . China Ta iwa nAPAC

e x- JP

APAC

e x- JPChina China Ta iwa n Europe

APAC

e x- JPKore a Kore a China A Ta iwa n

15 .1% - 18 .2 % 17 .7 % 3 .7 % 3 .1% - 7 .6 % 1.1% 2 8 .5 % - 14 .3 % 19 .5 % - 2 2 .4 % - 14 .2 % 5 .0 % 16 .9 %

China Ta iwa n U.S . China A Ja pa nAPAC

e x- JPEurope Europe China Kore a Europe Europe Kore a ASEAN

4 .8 % - 2 0 .2 % 16 .0 % - 2 .6 % - 3 .7 % - 9 .1% 0 .2 % 2 6 .2 % - 18 .7 % 13 .1% - 2 4 .2 % - 15 .9 % 4 .5 % 16 .4 %

Europe China A China A India Europe Ta iwa n India Ja pa n Kore a ASEAN ASEAN ASEAN ASEAN Ja pa n

4 .5 % - 2 0 .5 % 10 .9 % - 3 .8 % - 5 .7 % - 11.0 % - 1.4 % 2 4 .4 % - 2 0 .5 % 8 .8 % - 3 0 .4 % - 2 1.9 % 3 .2 % 13 .5 %

China A India Ja pa n ASEAN Kore a ASEAN China A U.S . China A India India India India U.S .

- 8 .4 % - 3 7 .2 % 8 .4 % - 4 .5 % - 10 .7 % - 18 .4 % - 15 .2 % 2 1.8 % - 2 7 .6 % 7 .6 % - 3 1.1% - 2 2 .2 % 1.5 % 13 .3 %

10-yrs ('10 - '20)

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31.5%

24.6%

20.1%19.5% 18.9%

-5.0%

-15.9%

-6.9%

-13.2%

-15.9%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

U.S. Europe Japan Asia Pacificex-Japan

EM U.S. Europe Japan Asia Pacificex-Japan

EM

2019

Source: FactSet, MSCI, Standard & Poor’s, J.P. Morgan Asset Management. *All return values are MSCI Gross Index (official) data, except the U.S., which is the S&P 500. **Multiple expansion is based on the forward price-to-earnings ratio. ***Earnings per share (EPS) growth outlook is based on next 12 month aggregate (NTMA) earnings estimates. Past performance is not a reliable indicator of current and future results. Guide to the Markets – Asia. Data reflect most recently available as of 31/05/20.

Sources of global equity returns*Total return, USD

2020 YTD

Multiple expansion**Total return

EPS growth outlook***

Currency return Dividend yield

Global equities: Return composition GTM - Asia 35

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-80%

-60%

-40%

-20%

0%

20%

40%

60%

'13 '14 '15 '16 '17 '18 '19

Earnings growthEarnings per share, year-over-year change, consensus estimates

Source: IBES, MSCI, Standard & Poor’s, Thomson Reuters Datastream, J.P. Morgan Asset Management. Asia Pacific ex-Japan, EM, Europe and U.S. equity indices used are the MSCI Asia Pacific ex-Japan, MSCI Emerging Markets, MSCI Europe and S&P 500, respectively. *Initial 2020 earnings are 2020 earnings expectations as at 31/12/19. Consensus estimates used are calendar year estimates from IBES. Revisions are based on the current unreported year. Net earnings revisions is (number of companies with upward earnings revisions – number of companies with downward earnings revisions) / number of total companies. Past performance is not a reliable indicator of current and future results. Guide to the Markets – Asia. Data reflect most recently available as of 31/05/20.

Earnings revisions ratiosNet earnings revisions to consensus estimates, 13-week moving average

Global equities: Earnings expectations

2018

Initial 2020*

2019

U.S.

Europe

Asia Pacific

ex-Japan

Japan

Current 2020

GTM - Asia 37

24%

8%

5%6%

1%

-4%-3%

-2%

9%

15%

13%

9%

-22%

-1% -2%

-26%

-30%

-20%

-10%

0%

10%

20%

30%

U.S. EM Asia Pacific ex-Japan

Europe

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14.8

13.0 12.7 11.4 13.712.5

11.7

15.3 16.5

13.7

15.4

9.6

15.0 15.8

13.414.1 12.0

11.0

15.1

7.0

22.0

17.9

14.3 13.415.9

12.3

12.5 14.0

19.4

14.516.2

12.0

18.9

15.113.5 15.5

19.0

16.6 15.6

9.0

0x

10x

20x

30x

S&P 500 Europeex-UK

Asia Pacex-Japan

Emergingmarkets

ASEAN China A(CSI 300)

China HongKong

India Indonesia Japan Korea Malaysia Philippines Singapore Taiwan Thailand Brazil Mexico Russia

Source: Bloomberg Finance L.P., China Securities Index, FactSet, MSCI, Standard & Poor’s, J.P. Morgan Asset Management.Price-to-earnings (P/E) and price-to-book (P/B) ratios are in local currency terms. China A valuations based on the CSI 300 Index and use 10 years of data due to availability. China valuation is based on the MSCI China. 15-year range for P/E and P/B ratios are cut off to maintain a more reasonable scale for some indices. Past performance is not a reliable indicator of current and future results. Guide to the Markets – Asia. Data reflect most recently available as of 31/05/20.

Equity market valuations – Price to bookTrailing P/B ratios

Equity market valuations – Price to earningsForward P/E ratios

15-yr. average

Latest

15-yr. range38.3 35.8

15-yr. average

Latest

15-yr. range

5.2

Global equities: Valuations

5.2

GTM - Asia 38

2.7

1.7 1.7 1.72.0

1.9

1.6 1.4

3.03.3

1.41.3

2.0

2.4

1.5 1.9

2.0

1.8

2.7

1.0

3.3

1.7 1.5 1.5 1.41.7

1.6

1.1

2.62.1

1.10.9

1.51.6

1.1

1.9

1.61.9

1.7

0.8

0x

1x

2x

3x

4x

5x

S&P 500 Europeex-UK

Asia Pacex-Japan

Emergingmarkets

ASEAN China A(CSI 300)

China HongKong

India Indonesia Japan Korea Malaysia Philippines Singapore Taiwan Thailand Brazil Mexico Russia

Page 13: Monthly Market Review Jun 2020 · For policymakers, they can breathe a sigh of relief that the economy has bottomed. They have stopped the bleeding, but it could be another several

13

Source: Barclays, Bloomberg Finance L.P., FactSet, J.P. Morgan Economic Research, J.P. Morgan Asset Management. Based on Bloomberg Barclays U.S. Aggregate Credit – Corporate High Yield Index (U.S. Corporate HY), Bloomberg Barclays U.S. Aggregate Credit – Corporate Investment Grade Index (U.S. Corporate IG), J.P. Morgan Government Bond Index – EM Global (GBI-EM) (Local EMD), J.P. Morgan Emerging Market Bond Index Global (EMBIG) (USD EMD), J.P. Morgan Asia Credit Index (JACI) (USD Asian Bond), Bloomberg Barclays Pan European High Yield (Europe HY), J.P. Morgan Government Bond Index – Global Traded (DM Government Bond), J.P. Morgan Asia Credit High Yield Index (Asia HY), Bloomberg Barclays Global U.S. Treasury – Bills (3-5 years) (U.S. Treasury) and Bloomberg Barclays U.S. Treasury – Bills (1-3 months) (Cash). 5-year data is used to calculate annualized returns (Ann. Ret.). Returns are in U.S. dollars and reflect the period from 31/05/15 – 31/05/20. *Duration is a measure of the sensitivity of the price (the value of the principal) of a fixed income investment to a change in interest rates and is expressed as number of years. Rising interest rates mean falling bond prices, while declining interest rates mean rising bond prices. **Correlation to the MSCI AC World Index is a measure over 10 years of data. Positive yield does not imply positive return. Past performance is not a reliable indicator of current and future results.Guide to the Markets – Asia. Data reflect most recently available as of 31/05/20.

Global bond opportunities Fixed income sector returns

Global fixed income: Yields and returns GTM - Asia 47

Sector YTMDuration*

(years)

Correl. to

MSCI AC

World**

Correl. to

10-year

UST

Asia HY 8.7% 4.3 0.70 -0.07

U.S. HY 7.3% 3.8 0.83 -0.23

Europe HY 5.5% 3.7 0.81 -0.32

USD EMD 5.4% 7.9 0.61 0.12

Local EMD 4.8% 5.0 0.67 -0.08

USD Asian 4.3% 5.6 0.55 0.25

U.S. IG 2.4% 8.4 0.36 0.48

DM Gov't 0.6% 8.8 0.12 0.59

U.S. Treasury 0.5% 7.2 -0.44 0.98

Cash 0.1% 0.2 -0.11 0.12

5-yrs

2015 2016 2017 2018 2019 1Q '20 YTD '20 Ann. Ret.

Asia HY U.S . HYEurope

HYCa sh U.S . IG

U.S .

Tre a s

U.S .

Tre a sU.S . IG

5 .2 % 17 .1% 2 1.0 % 1.8 % 14 .5 % 8 .2 % 8 .6 % 5 .0 %

USD

Asia n

Loc a l

EMD

Loc a l

EMD

U.S .

Tre a s

USD

EMD

DM

Gov't

DM

Gov't

USD

Asia n

2 .8 % 11.4 % 15 .4 % 0 .9 % 14 .4 % 3 .1% 4 .1% 4 .4 %

USD

EMDAsia HY

USD

EMD

DM

Gov'tU.S . HY Ca sh U.S . IG Asia HY

1.2 % 11.2 % 9 .3 % - 0 .7 % 14 .3 % 0 .5 % 3 .0 % 4 .4 %

U.S .

Tre a s

USD

EMDU.S . HY

USD

Asia n

Loc a l

EMD

USD

Asia nCa sh U.S . HY

0 .8 % 10 .2 % 7 .5 % - 0 .8 % 13 .1% - 3 .6 % 0 .5 % 4 .3 %

Ca sh U.S . IG Asia HY U.S . HY Asia HY U.S . IGUSD

Asia n

USD

EMD

0 .0 % 6 .1% 6 .9 % - 2 .1% 12 .8 % - 3 .6 % 0 .2 % 4 .2 %

U.S . IGUSD

Asia n

DM

Gov'tU.S . IG

USD

Asia n

USD

EMD

USD

EMD

U.S .

Tre a s

- 0 .7 % 5 .8 % 6 .8 % - 2 .5 % 11.3 % - 11.8 % - 4 .6 % 3 .9 %

DM

Gov't

Europe

HYU.S . IG Asia HY

Europe

HYAsia HY U.S . HY DM Gov't

- 2 .6 % 3 .4 % 6 .4 % - 3 .2 % 10 .3 % - 12 .0 % - 4 .7 % 3 .6 %

U.S . HYDM

Gov't

USD

Asia n

USD

EMD

U.S .

Tre a sU.S . HY Asia HY

Europe

HY

- 4 .5 % 1.6 % 5 .8 % - 4 .6 % 6 .9 % - 12 .7 % - 5 .3 % 2 .3 %

Europe

HY

U.S .

Tre a s

U.S .

Tre a s

Loc a l

EMD

DM

Gov't

Loc a l

EMD

Europe

HY

Loc a l

EMD

- 7 .6 % 1.0 % 2 .3 % - 6 .7 % 6 .0 % - 16 .1% - 8 .5 % 1.1%

Loc a l

EMDCa sh Ca sh

Europe

HYCa sh

Europe

HY

Loc a l

EMDCa sh

- 18 .0 % 0 .3 % 0 .8 % - 8 .2 % 2 .2 % - 17 .0 % - 10 .1% 1.1%

Page 14: Monthly Market Review Jun 2020 · For policymakers, they can breathe a sigh of relief that the economy has bottomed. They have stopped the bleeding, but it could be another several

14

Debt return compositionLast 12 months

Source: J.P. Morgan Economics Research, J.P. Morgan Asset Management.Based on J.P. Morgan Asia Credit High Yield Index (USD Asia high yield), J.P. Morgan CEMBI (USD EMD corporates), J.P. Morgan EMBI Global (USD EMD), J.P. Morgan Asia Credit Corporates Index (USD Asia corporates), J.P. Morgan Asia Credit China Index (USD China offshore credit), J.P. Morgan Developed Market HY Index (USD DM high yield), J.P. Morgan Domestic High Yield Index (U.S. high yield), J.P. Morgan GBI-EM Global (Local EMD), J.P. Morgan GBI-DM (Local DM sovereigns). Past performance is not a reliable indicator of current and future results.Guide to the Markets – Asia. Data reflect most recently available as of 31/05/20.

Income return

Price return

Currency return

Total return

Global fixed income: Return composition GTM - Asia 48

-12%

-9%

-6%

-3%

0%

3%

6%

9%

12%

15%

Local DMsovereigns

USD Chinaoffshore credit

USD EMDcorporates

USD Asiacorporates

Local EMD USD EMD USD DMhigh yield

U.S. high yield USD Asiahigh yield

Page 15: Monthly Market Review Jun 2020 · For policymakers, they can breathe a sigh of relief that the economy has bottomed. They have stopped the bleeding, but it could be another several

15

Source: iBoxx, ICE BofA Merrill Lynch, J.P. Morgan Economics Research, J.P. Morgan Asset Management.Based on J.P. Morgan Domestic High Yield Index (U.S. high yield), J.P. Morgan U.S. Liquid Index (JULI) (U.S. investment grade), J.P. Morgan Euro High Yield Index (Euro high yield), iBoxx EUR corporates (Euro investment grade), J.P. Morgan Asia Credit Index (JACI) (USD Asia credit), J.P. Morgan Asia Credit China Index (USD China offshore credit), J.P. Morgan Asia Credit High Yield Index (USD Asia high yield), J.P. Morgan EMBI Global (EMD USD), J.P. Morgan Corporate Emerging Markets Bond Index – CEMBI (EMD USD corporates), J.P. Morgan GBI-EM Global (Local EMD). Positive yield does not imply positive return. Past performance is not a reliable indicator of current and future results.Guide to the Markets – Asia. Data reflect most recently available as of 31/05/20.

Spread to worst across fixed income sub-sectorsBasis points, last ten years

10-yr. average

Latest

10-yr. range

Global fixed income: Valuations GTM - Asia 49

545

167

516

112

238

330

465

355332

474

724

215

657

142

331 333

855

463424 424

365

111

299

43

157 159

274 263217

329

0

200

400

600

800

1,000

1,200

U.S. highyield

U.S.investment

grade

Euro highyield

Euroinvestment

grade

USDAsiacredit

USD Chinaoffshore credit

USD Asiahigh yield

USD EMD USD EMDcorporates

Local EMD

Page 16: Monthly Market Review Jun 2020 · For policymakers, they can breathe a sigh of relief that the economy has bottomed. They have stopped the bleeding, but it could be another several

16

Last twelve month sector default ratesSectors with highest index weights

Source: J.P. Morgan Economics Research, J.P. Morgan Asset Management.*Default rate is defined as the percentage of the total market trading at or below 50% of par value and includes any Chapter 11 filing, pre-packaged filing or missed interest payments. Spreads indicated are benchmark yield-to-worst less comparable maturity Treasury yields. **Data reflects 20-yr average and is as of 31/12/19. ***EBITDA is earnings before interest, tax, depreciation and amortisation. U.S. corporate high yield is represented by the J.P. Morgan Domestic High Yield Index.Guide to the Markets – Asia. Data reflect most recently available as of 31/05/20.

High yield leverageEBITDA*** / interest expense Debt/EBITDA

High yield spread and default rate*

Default rate Spread to worst (basis points)

10-yr average Latest

HY spread to worst 543bps 724bps

HY energy spread to worst 654bps 1235bps

HY default rate 1.9% 4.9%

HY ex-energy default rate 3.0%** 3.4%

Recessions

Interest coverage

U.S. high yield bonds

Leverage

Default rate

Index weight

3.5

4.0

4.5

5.0

5.5

3.0

3.5

4.0

4.5

5.0

5.5

'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19

GTM - Asia 58

10.8% 10.5%

6.9% 6.8% 6.8% 6.7%

0.3%

11.8%

0.2% 0.0%

4.1%

0.0%0%

2%

4%

6%

8%

10%

12%

14%

Healthcare Energy Financial Technology Services GamingLodging And

Leisure

0

400

800

1,200

1,600

2,000

0%

4%

8%

12%

16%

20%

'90 '95 '00 '05 '10 '15 '20

Page 17: Monthly Market Review Jun 2020 · For policymakers, they can breathe a sigh of relief that the economy has bottomed. They have stopped the bleeding, but it could be another several

17

Source: Bloomberg Finance L.P., Dow Jones, FactSet, J.P. Morgan Economic Research, MSCI, J.P. Morgan Asset Management. The “Diversified” portfolio assumes the following weights: 20% in the MSCI World Index (DM Equities), 20% in the MSCI AC Asia Pacific ex-Japan (APAC ex-JP), 5% in the average of the MSCI EM Latin America and MSCI EM EMEA Indices (EM ex-Asia), 10% in the J.P. Morgan EMBIG Index (EMD), 10% in the Bloomberg Barclays Aggregate (Global Bonds), 10% in the Bloomberg Barclays Global Corporate High Yield Index (Global Corporate High Yield), 15% in J.P. Morgan Asia Credit Index (Asian Bonds), 5% in Bloomberg Barclays U.S. Aggregate Credit – Corporate Investment Grade Index (U.S. IG) and 5% in Bloomberg Barclays U.S. Treasury –Bills (1-3 months) (Cash). Diversified portfolio assumes annual rebalancing. All data represent total return in U.S. dollar terms for the stated period. 10-year total return data is used to calculate annualized returns (Ann. Ret.) and 10-year price return data is used to calculate annualized volatility (Ann. Vol.) and reflects the period 30/04/10 – 30/04/20. Please see disclosure page at end for index definitions. Past performance is not a reliable indicator of current and future results.Guide to the Markets – Asia. Data reflect most recently available as of 31/05/20.

Asset class returns GTM - Asia 61

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q '20 YTD '20 Ann. Ret. Ann. Vol.

APAC

e x- JPEMD

APAC

e x- JPDM Equitie s

Asia n

Bonds

Asia n

BondsEM e x- Asia

APAC

e x- JPCa sh DM Equitie s Ca sh U.S . IG

DM

Equitie s

EM e x-

Asia

18 .4 % 8 .5 % 2 2 .6 % 2 7 .4 % 8 .3 % 2 .8 % 2 7 .1% 3 7 .3 % 1.8 % 2 8 .4 % 0 .5 % 3 .0 % 9 .9 % 2 3 .0 %

EM e x- Asia U.S . IGGloba l Corp

HY

Globa l Corp

HYU.S . IG EMD

Globa l Corp

HYDM Equitie s

Asia n

Bonds

APAC

e x- JP

Globa l

Bonds

Globa l

Bonds

Globa l

Corp HY

APAC

e x- JP

16 .6 % 8 .1% 18 .9 % 8 .4 % 7 .5 % 1.2 % 14 .0 % 2 3 .1% - 0 .8 % 19 .5 % - 0 .3 % 2 .1% 6 .3 % 16 .8 %

Globa l Corp

HY

Globa l

BondsEMD Dive rsifie d EMD Ca sh EMD EM e x- Asia

Globa l

BondsEM e x- Asia

Asia n

BondsCa sh Dive rsifie d

DM

Equitie s

13 .8 % 5 .6 % 18 .5 % 5 .4 % 5 .5 % 0 .0 % 10 .2 % 2 0 .3 % - 1.2 % 18 .9 % - 3 .6 % 0 .5 % 5 .9 % 13 .9 %

DM Equitie sAsia n

BondsEM e x- Asia

APAC

e x- JPDM Equitie s DM Equitie s Dive rsifie d Dive rsifie d U.S . IG Dive rsifie d U.S . IG

Asia n

BondsEMD Dive rsifie d

12 .3 % 4 .1% 17 .0 % 3 .7 % 5 .5 % - 0 .3 % 8 .2 % 17 .0 % - 2 .5 % 16 .5 % - 3 .6 % 0 .2 % 5 .7 % 9 .0 %

Dive rsifie dGloba l Corp

HYDM Equitie s Ca sh

APAC

e x- JPU.S . IG DM Equitie s

Globa l Corp

HY

Globa l Corp

HYU.S . IG EMD EMD

Asia n

Bonds

Globa l

Corp HY

12 .2 % 2 .6 % 16 .5 % 0 .0 % 3 .1% - 0 .7 % 8 .2 % 10 .3 % - 3 .5 % 14 .5 % - 11.8 % - 4 .6 % 5 .6 % 7 .9 %

EMD Ca sh Dive rsifie dAsia n

BondsDive rsifie d

Globa l

Bonds

APAC

e x- JPEMD EMD EMD Dive rsifie d

Globa l Corp

HYU.S . IG EMD

12 .0 % 0 .1% 15 .5 % - 1.4 % 3 .0 % - 3 .2 % 7 .1% 9 .3 % - 4 .6 % 14 .4 % - 13 .5 % - 5 .3 % 5 .5 % 7 .8 %

Asia n

BondsDive rsifie d

Asia n

BondsU.S . IG

Globa l

BondsDive rsifie d U.S . IG

Globa l

BondsDive rsifie d

Globa l Corp

HY

Globa l Corp

HYDive rsifie d

APAC

e x- JPU.S . IG

10 .6 % - 2 .4 % 14 .3 % - 1.5 % 0 .6 % - 3 .3 % 6 .1% 7 .4 % - 5 .8 % 13 .4 % - 13 .6 % - 6 .3 % 5 .4 % 5 .0 %

U.S . IG DM Equitie s U.S . IGGloba l

Bonds

Globa l Corp

HY

Globa l Corp

HY

Asia n

BondsU.S . IG EM e x- Asia

Asia n

Bonds

APAC

e x- JPDM Equitie s

Globa l

Bonds

Globa l

Bonds

9 .0 % - 5 .0 % 9 .8 % - 2 .6 % 0 .2 % - 4 .9 % 5 .8 % 6 .4 % - 6 .8 % 11.3 % - 2 0 .7 % - 8 .0 % 2 .9 % 4 .7 %

Globa l

Bonds

APAC

e x- JP

Globa l

BondsEMD Ca sh

APAC

e x- JP

Globa l

Bonds

Asia n

BondsDM Equitie s

Globa l

BondsDM Equitie s

APAC

e x- JPCa sh

Asia n

Bonds

5 .5 % - 15 .4 % 4 .3 % - 6 .6 % 0 .0 % - 9 .1% 2 .1% 5 .8 % - 8 .2 % 6 .8 % - 2 0 .9 % - 13 .2 % 0 .6 % 4 .6 %

Ca sh EM e x- Asia Ca sh EM e x- Asia EM e x- Asia EM e x- Asia Ca sh Ca shAPAC

e x- JPCa sh EM e x- Asia EM e x- Asia

EM e x-

AsiaCa sh

0 .1% - 2 1.2 % 0 .1% - 8 .5 % - 2 0 .2 % - 2 2 .7 % 0 .3 % 0 .8 % - 13 .7 % 2 .2 % - 3 8 .3 % - 2 9 .4 % - 2 .6 % 0 .2 %

10-yrs ('10 - '20)

Page 18: Monthly Market Review Jun 2020 · For policymakers, they can breathe a sigh of relief that the economy has bottomed. They have stopped the bleeding, but it could be another several

18

-4 -3 -2 -1 0 1 2 3 4

Commodity Index

Agriculture

Natural Gas

Oil

Industrial Metals

Precious Metals

Gold

Example

Source: Bloomberg Finance L.P., FactSet, J.P. Morgan Asset Management; (Left) CME; (Right) Barclays, J.P. Morgan Economic Research, MSCI. Commodities are represented by the appropriate Bloomberg Commodity sub-index priced in U.S. dollars. Crude oil shown is West Texas Intermediate (WTI) crude. Other commodity prices are represented by futures contracts. Z-scores are calculated using daily prices over the past five years. Based on Bloomberg Commodity Index (Comdty.); MSCI ACWI Select – Energy Producers IMI, Metals & Mining Producers ex Gold & Silver IMI, Gold Miners IMI, Agriculture Producers IMI (Energy (E), M&M (E), Gold (E), Agri. (E)); Bloomberg Barclays Global Aggregate Credit – Corporate Energy Index (Energy (FI)); Bloomberg Barclays U.S. Aggregate Credit – Corporate High Yield Metals & Mining Index (U.S. M&M (FI)); Bloomberg Barclays Euro Aggregate Credit – Corporate Metals & Mining Index (Euro M&M (FI)); J.P. Morgan Emerging Market Corporate Credit – Corporate Metals & Mining Index (EM M&M (FI)).5-year total return data is used to calculate annualized returns (Ann. Ret.) and 5-year price return data is used to calculate annualized volatility (Ann. Vol.) and reflects the period 31/05/15 – 31/05/20. Past performance is not a reliable indicator of current and future results. Guide to the Markets – Asia. Data reflect most recently available as of 31/05/20.

Commodity pricesCommodity price z-scores for the past five years, USD per unit

Returns

High level

Current

Low level

$1.8

$35

$1,752

$35

$1.6

$64

$1,769

$76$12

$1,050

$34

$144$84

$98

$208$144

$207

$103$59

$64

Commodities GTM - Asia 67

$4.8

2016 2017 2018 2019 1Q '20 YTD '20 Ann. Ret. Ann. Vol.

Gold (E) M&M (E)Euro M&M

(FI)Gold (E)

Euro M&M

(FI)Gold (E) Gold (E) Gold (E)

6 2 .9 % 3 7 .5 % - 0 .9 % 5 1.1% - 9 .2 % 15 .0 % 13 .4 % 6 2 .1%

M&M (E) Agri. (E)US M&M

(FI)M&M (E)

US M&M

(FI)

Euro M&M

(FI)

EM M&M

(FI)M&M (E)

5 7 .8 % 2 0 .3 % - 3 .5 % 17 .1% - 11.9 % - 3 .4 % 6 .1% 2 8 .7 %

US M&M

(FI)

EM M&M

(FI)

Ene rgy

(FI)

EM M&M

(FI)

EM M&M

(FI)

Ene rgy

(FI)

US M&M

(FI)Ene rgy (E)

4 5 .5 % 14 .7 % - 3 .7 % 16 .5 % - 16 .1% - 4 .6 % 4 .5 % 2 5 .4 %

EM M&M

(FI)

US M&M

(FI)

EM M&M

(FI)

US M&M

(FI)

Ene rgy

(FI)

EM M&M

(FI)

Ene rgy

(FI)Comdty.

3 2 .4 % 9 .9 % - 4 .1% 14 .0 % - 16 .2 % - 4 .9 % 3 .1% 19 .7 %

Ene rgy (E) Gold (E) Agri. (E) Agri. (E) Gold (E)US M&M

(FI)

Euro M&M

(FI)

US M&M

(FI)

2 9 .2 % 9 .4 % - 8 .9 % 13 .8 % - 19 .2 % - 6 .5 % 1.3 % 15 .5 %

Euro M&M

(FI)Ene rgy (E) Comdty.

Ene rgy

(FI)Comdty. Agri. (E) Agri. (E) Agri. (E)

2 1.9 % 9 .1% - 11.2 % 13 .4 % - 2 3 .3 % - 15 .5 % - 0 .1% 15 .1%

Agri. (E)Ene rgy

(FI)Ene rgy (E) Ene rgy (E) Agri. (E) Comdty. M&M (E)

Ene rgy

(FI)

15 .7 % 9 .0 % - 11.4 % 9 .5 % - 2 4 .3 % - 2 1.2 % - 0 .1% 12 .4 %

Comdty.Euro M&M

(FI)Gold (E) Comdty. M&M (E) M&M (E) Ene rgy (E)

EM M&M

(FI)

11.8 % 3 .9 % - 13 .0 % 7 .7 % - 3 5 .6 % - 2 1.5 % - 6 .7 % 12 .3 %

Ene rgy

(FI)Comdty. M&M (E)

Euro M&M

(FI)Ene rgy (E) Ene rgy (E) Comdty.

Euro M&M

(FI)

11.1% 1.7 % - 17 .8 % 5 .2 % - 4 5 .0 % - 3 5 .3 % - 7 .8 % 8 .9 %

2015 - 2020

Page 19: Monthly Market Review Jun 2020 · For policymakers, they can breathe a sigh of relief that the economy has bottomed. They have stopped the bleeding, but it could be another several

19

U.S. oil inventory and rig count* Number of rigs Billion barrels

Source: FactSet, J.P. Morgan Asset Management; (Top right) Baker Hughes, U.S. Department of Energy; (Bottom right) J.P. Morgan EM Macro bites, J.P. Morgan Securities. *Weekly U.S. crude oil and petroleum ending inventory includes strategic petroleum reserve, and active rig count represents both natural gas and oil rigs. Past performance is not a reliable indicator of current and future results.Guide to the Markets – Asia. Data reflect most recently available as of 31/05/20.

Price of oilBrent crude, USD / bbl

Fiscal breakeven oil priceUSD / bbl, 2020 estimates

Oil: Short-term market dynamics

Rig count U.S. oil inventory

$45$51 $54

$61 $61

$74

$115

$0

$20

$40

$60

$80

$100

$120

Qatar Russia Kuwait Iraq UAE SaudiArabia

Nigeria

05/2020: $37.67

07/2008: $145.65

12/2008:

$34.27

06/2014: $115.06

GTM - Asia 69

Page 20: Monthly Market Review Jun 2020 · For policymakers, they can breathe a sigh of relief that the economy has bottomed. They have stopped the bleeding, but it could be another several

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