Asian equities continued to fall on worries over the health of the global economy; Europe appeared on the brink of recession, while the US housing troubles were underlined by the precarious balance sheets of mortgage agencies Freddie Mac and Fannie Mae.Within the region, deteriorating corporate earnings reflected falling demand from the West and rising inflation - although oil prices fell back over the month. Inflation continued to climb throughout the region despite the recent retreat in the price of oil and other commodities.
Looking ahead, we expect market sentiment to be swayed by the still unfolding crisis in credit markets, as major financial institutions face massive write-downs. On a brighter note, the threat of inflation within the region appears to be diminishing, with commodity prices having peaked.In portfolio activity, we topped up various holdings on price weakness, including Hong Kong-listed Standard Chartered Bank and Australian miner Rio Tinto. Against this, we pared Malaysia's Public Bank and Hong Kong-listed utility, CLP, both of which outperformed the general market.