Henderson FAR East Income Limited

Asian equities fell in US dollar terms. Concerns about elevated share prices of firms related to artificial intelligence (AI), continued US/Iran tensions (despite June's peace agreement) and a strengthening US dollar dampened investor sentiment. Chinese equities fell as the technology sector retreated, while some weak economic data also unnerved investors. Retail sales in China shrank in May, which was the first negative result since the end of 2022. Hong Kong stocks also weakened as they tracked losses in China. Indian equities rose, helped by better-than-anticipated first-quarter economic growth and efforts by the country's central bank to increase foreign investment. South Korean equities rose, with the local benchmark KOSPI Index reaching an all-time high, although the index saw significant AI-related volatility. Sentiment was supported by some positive economic news. The manufacturing Purchasing Managers' Index (PMI) increased to a five-year high in May, while an early reading showed that exports continued to surge in June. Taiwanese stocks also rose, with the local benchmark TAIEX Index hitting a record high, driven by technology stocks. However, the sector came under pressure towards the end of June, which limited the overall gain. Indonesian shares fell heavily. The country faced a possible downgrade from index provider MSCI's emerging markets benchmark, while a government plan to impose greater control on commodity exports also unnerved investors. Indonesia's central bank raised interest rates twice in June to defend the rupiah, which hit an all-time low against the US dollar.