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H1 2022 Asset Class Review


Equities sold off in H1 2022 after major central banks, in efforts to tackle inflation, acted in concert to tighten monetary policies and hence reduce liquidity in financial markets. Geopolitical tensions exacerbated rising inflation following the Russian-Ukraine conflict, which disrupted the supplies of major commodities including crude oil, natural gas, wheat and other agricultural staples.

Growth-style equities, especially those in the US Technology sector, led losses due to their susceptibility to higher interest rates, whereas markets in Europe and Japan, with heavier weightings in Value-style sectors were more resilient. Energy was the best-performing equity sector due to soaring energy prices.

China’s zero-COVID policy and the subsequent stringent lockdowns in several major and port cities had a severe disruptive impact which shook investor confidence. As caution is still warranted when investing in Chinese equities, consider diversifying via a broader basket of Asia ex-Japan equities.

MSCI World Net Total Return USD Index
YTD Total Return (%)

Fixed Income

The US Federal Reserve’s (Fed) reversal of quantitative easing (QE) and move to hike interest rates have lifted fixed income yields higher across the board. Inflation concerns have pushed longer-term bond yields higher. As such, shorter-duration Asian Investment Grade (IG) bonds and US High Yield bonds have outperformed US IG bonds.

While local currency emerging market debts have also been the better performers, the USD’s strength has dented returns on a net total basis and lessened their investor appeal.

Bloomberg Barclays Global-Aggregate Total Return Index (Unhedged USD)
YTD Total Return (%)

Currencies and Commodities

The US Fed’s aggressive monetary policy tightening to tackle inflation has strengthened the USD against all major currencies. The SGD’s relatively better performance was due to the MAS’ gradual appreciation approach to avoid importing inflation into Singapore, while the AUD was a beneficiary of higher commodity prices.

Unsurprisingly, Crude Oil was the best-performing commodity due to the squeeze in global supply following the widening ban on Russian exports, while Gold was relatively flat despite concerns over rising inflation.


US Dollar Index
YTD Movement Against the US dollar (%)


Gold & Brent Crude Oil
YTD Total Return (%)

Source: Bloomberg. All percentages shown are expressed in their respective local currency terms and reflect the total returns between 1 January and 31 May 2022.

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