Matthews Asia Country Updates: China, India, Japan, Korea & Southeast Asia

Matthews Asia Country Updates: China, India, Japan, Korea & Southeast Asia

China / Hong Kong

In December, the MSCI China Index returned -1.34%. Hong Kong's Hang Seng Index returned -0.36% (-0.33% in U.S. dollar terms) and China's domestic CSI300, the A share index, returned 4.63% (3.18% in U.S. dollar terms). China's currency, the renminbi (RMB), ended the year at 6.49 against the U.S. dollar, a devaluation of 5.8% since the end of 2014. The real effective exchange rate was still up 4.5% year-to-date through the end of November, and was up by 57% from June 2005, when China began to reform its exchange rate mechanism.

Strong growth in real (inflation-adjusted) retail sales over the last several months demonstrate that just as there was...