SaxoWealthCare Quarterly Commentary Asian Growth SaxoWealthCare Quarterly Commentary Asian Growth SaxoWealthCare Quarterly Commentary Asian Growth

SaxoWealthCare Quarterly Commentary Asian Growth

Market Rewind

Summary:  After each quarter you can download your personal quarterly report into your SaxoWealthCare account. In this article we would like to further explain what has happened in the market and how we have responded to this within your profile and portfolio.

Market Review

In the fourth quarter of 2023, both stock markets and bond markets finished positively. This benefited investment portfolios across all risk levels.

Supporting this rally was the decline of inflation towards target, whilst the major developed economies have so far been able to avoid recession. As a result, the global stock market rose an attractive 6.21% as per the Morningstar Global Target Market Index in Euro terms, whilst global government bonds also enjoyed a 5.36% return as per the Morningstar Global Core Bond index, Euro hedged.

2023 represents a sharp recovery for many equity investors, recouping 2022 losses. Regionally, the US has experienced the above economic story to the greatest extent and performed best. The Magnificent seven (including Microsoft, Amazon, Meta, Apple, Alphabet, Nvidia and Tesla) overwhelmingly contributed to market returns for a large part of 2023 as investors flocked to safety in cash rich companies as well as to gain exposure to the AI theme, especially with respect to Nvidia. By the fourth quarter overall market sentiment had extended beyond the Magnificent Seven and by 2023-end many sectors produced positive returns, whilst the energy sector was the distinct underperforming sector. On the other hand, China is a noteworthy country that is struggling beyond others, who have entered deflationary environment and whereby stock markets have been bleeding returns throughout the year.

Bonds also produced positive returns in the end, although they have yet to recoup last year’s drawdown. In the first half of 2023 the interest rate hikes pushed bond yields upward (deceasing bond values), yet by Q4 interest rate hiking had paused and rather the market started anticipating rate cuts, pushing bond yields downward (increasing bond values). Bond values increase as their yield[1] declines and all bond yields are influenced to a degree by the movement of “safe haven” government bond yields, with US Treasuries being a primary indicator for the West. The 3-year US Treasury yield, a good indicator for the short term, finished the year at 3.84%, down from 4.60% at September end, representing a meaningful decline as the market anticipated that central banks could reduce interest rates to support the economy, enabled by improved inflation rates.

[1] Yield is the return a bond investor receives in the form of an interest payment (the “coupon”) as a percentage of the bond price.


Portfolio Performance

Fixed Mix Strategies


10Y Annualised Return

10Y Annualised Volatility

Since Inception

Year to Date

Quarter to Date

Very Dynamic
























Very Defensive






Source: Data from Bloomberg, Morningstar, BlackRock, Amundi, from 03/31/2014 to 03/29/2024. Inception date of the strategy is 5/31/2022. Returns are shown in HKD and gross of costs such as management fee and transaction costs but net of ETF costs (TER). Returns are calculated with a monthly rebalance to target allocation. Returns before the launch of the strategy with Saxo are calculated based on the portfolio allocation at the launch date. These historical returns do not attempt to simulate investment decisions that could have been made before the first portfolio was implemented with Saxo. The returns presented are indicative of the returns of individual investors, which may differ slightly.

All five risk profiles began 2024 with a positive return. Asian equities rose by +2.6%, while global bonds with an Asian bias saw a more modest increase of +0.3% in the first quarter. Both the equities and bonds components of our portfolios performed similarly to the markets.

Over the first quarter of 2024, investors with more dynamic profiles saw their assets grow with returns of +2.8% in just the first few months of the year, continuing to recover a larger part of the negative returns from 2022. Meanwhile more conservative investors continued to see their portfolios grow slowly but steadily with an increase of +0.8% so far in 2024.

Portfolio Protector and Goal-Based Strategies 

Investors who have opted for Portfolio Protector or Goal-Based strategies have their own unique asset allocation that depends on their individual preferences and constraints. Still, the mix of assets in their portfolios will fall somewhere on the spectrum of the Fixed Mix portfolios since they are composed of the same building blocks for equity and bonds. Hence, we believe the information presented in this report should bring them some light to interpret the performance of their portfolios accordingly.


Portfolio Changes


The Asian active equity portfolio was rebalanced two times by BlackRock over the first quarter of 2024.

This portfolio gives investors exposure to Asian equities. It aims to outperform Asian stock markets via dynamic tactical adjustments to the mix of ETFs in the portfolio. These adjustments are done via one investment model: country rotation. Country rotation is implemented through ETFs that track the general market of various countries.

Late January

The primary goal of the rebalance was to consolidate the allocation to China. This involved closing the position in China A shares and transitioning to Core MSCI China, which offers a broader exposure.

Onshore China A shares typically benefit from greater government support and regulatory controls on selling during market selloffs. In contrast, offshore Chinese companies are not subject to the same controls. They are more affected by poor macro data and geopolitical risk, leading to weaker investor sentiment and underperformance.

The potential for a reversal presented a good opportunity to realize gains in China A shares and reallocate to the Core MSCI China exposure, which also includes exposure to these offshore Chinese companies listed outside mainland China.

Early February

This rebalance was motivated by a regular review of the emerging market country sub-strategy.

The allocation to Taiwan was increased to an overweight position relative to the benchmark. Taiwan was favored over other East Asian countries due to its strong connection to the AI theme. Despite geopolitical tensions in the region, BlackRock anticipated that AI would continue to be a driving force in equity markets.

Conversely, the allocation to South Korea was reduced. Taiwan and South Korea have a strong correlation due to their ties to the semiconductor industry. Between the two countries, BlackRock had more confidence in Taiwan, as it stands to benefit more directly from the AI theme, while South Korea is seen as having less to gain from AI. Regarding China, BlackRock maintained a slightly positive stance to capture potential upside from political stimulus.

Lastly, the allocation to India was slightly reduced. This adjustment was influenced by the benchmark allocation to India, which had decreased since the last rebalance. Despite this, the exposure to India remained overweight, supported by a robust domestic economy and controlled inflation.


The bonds portfolio was rebalanced one time by Amundi over the first quarter of 2024.

This is a yield-seeking bond portfolio. It is composed of global government and corporate bonds with a medium duration, but it also has a special focus on Asian investment grade corporate bonds. The foreign currency exposure is mostly hedged to USD in this portfolio. It is designed to invest for more stable returns than equities and to act as a diversifier to equities during negative periods, with a focus on the Asian region.


The recent decline in Emerging Market (EM) debt prices created a good opportunity to invest in this asset class. An allocation to EM debt was made in the portfolio, funded by a reduction in US debt. This adjustment kept duration stable while increasing and diversifying the portfolio’s credit risk exposure.

Several positive factors supported this adjustment, including the US Federal Reserve's potential change in direction as well as decreasing inflation, along with strong economic growth in emerging markets. All these formed expectations of a strong recovery in EM debt, making the depressed valuations and higher yields more attractive.

At the same time, various factors reduced the pressure on EM Central Banks' monetary policies, such as lower or stable US interest rates and a stable US dollar. This allowed central banks in emerging markets more flexibility to lower their own interest rates, potentially reducing the risk of a sharp global economic downturn (“hard landing”).

Overall, the technical conditions for investing in EM debt were very favorable at the time of the portfolio adjustment. With fewer EM debt securities available for trading in the past two years, the market had fewer investors, so even a small increase in investment flows could have a significant positive impact on returns.

These changes maintained the duration of the portfolio at around 6.9 years and increased the hedged yield from 3.27% to 3.35%. The Option-Adjusted Spread (OAS) also rose from 49 to 58, reflecting the increased credit risk from the investment in EM debt.


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