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Starting the year with a bang took a whole new meaning when news that the US had carried out an air strike in Baghdad on Friday, killing Iran’s top general. The calm equity markets which had ended the year with strong returns were abruptly disrupted after the drone attack caused an escalation to the already fragile geopolitical situation between the US and the Middle East. 

 

Markets remain on watch after Iran has vowed for “harsh revenge” following the killing of Mr. Soleimani, regarded as one of Iran’s most powerful men.

 

How markets reacted to the news...

  • We started the year believing that the party was going to continue as equity markets continued to climb higher after ending 2019 strongly.  But the unexpected spike in geopolitical tensions triggered by the US air strike sent jitters across markets. 
  • Because the strike took place near Asia’s market closing hours, markets outside Asia led the sell-off, which is expected to be followed by the Asian markets this week. 
  • Investors turned cautious, shifting into safe haven assets which saw treasury yields trending lower, whilst Gold prices moved higher alongside safe haven currencies.

  • Oil futures spiked as fears of a possible supply disruption escalated.

 

In other economic news...

  • US manufacturing sector reported 11-year low order volumes. Factory employment was also seen to have fell for the 5th straight month in December.

  • Germany reported weaker than expected employment numbers from the manufacturing sector, triggering recession concerns.

  • China has freed up an estimated USD11.9 billion after cutting its RRR by 50bps. The funds would allow banks to increase its lending capacity in an attempt to boost economic activity after growth was recorded to have dropped to its lowest pace in 30-years. Despite the slowdown, China remains one of the fastest growing economies globally.

 

What to look out for in the coming week?

  • Market volatility is expected to return, and markets will need to look out for directions from the possibility of a retaliatory action from Iran.

  • Gold prices is expected to continue its climb as investors stay on the side lines in lieu of more clarity, with some analysts predicting prices to hit new highs in 2020. An opportune time to gain exposure through the physically-backed Gold ETF -  TradePlus Shariah Gold Tracker (0828EA).

  • After ending the year on a high, prices of tech stocks were knocked off their feet after the air strike. The brave hearted have shifted back in a gradual pace, taking opportunity to pick up names at a cheaper price post the sell-off.  What’s your stand? Do you think its time to go double long on FANG+ stocks with the TradePlus NYSE FANG+ Daily (2x) Leveraged Tracker (0830EA), or do you think the worst is not over and its time to short the market with the TradePlus NYSE FANG+ Daily (-1x) Inverse Tracker (0831EA).

  • Will Prime Minister Boris Johnson’s bill to parliament this week help facilitate UK’s Brexit referendum this month? 

  • Will we be getting more information on the US-China phase 1 trade deal as the signing date of Jan 15 looms? Despite the on-going tensions, China has displayed resilience – displaying steady growth in retail sales, and its manufacturing sector PMI. In preparation of the upcoming lunar new year, spending patterns are expected to pick up, which could potentially lead to a push for the domestic consumption sector.  The S&P New China Sectors ex A Share Index closely tracks the domestic consumer sector – and is used as the benchmark for the TradePlus S&P New China Tracker (0829EA / 0829EB).  

  • Alternatively, there is the option to go double long on the broader China companies that are listed on the Hong Kong Stock Exchange or the Hang Seng China Enterprises Index through the TradePlus HSCEI Daily (2x) Leveraged Tracker (0832EA), or going short using the TradePlus HSCEI Daily (-1x) Inverse Tracker (0833EA).

 

A look at the performance of the TradePlus ETFs, and major global indices

 

Bursa
Stock Code

 TradePlus Exchange Traded Funds

2019

YTD
(3 Jan 2020)

NAV
(31 Dec 2018)

NAV
(31 Dec 2019)

NAV
(3 Jan 2020)

0828EA

 Shariah Gold Tracker

15.50%

1.88%

1.7500

2.0140

2.0594

0829EA / 0829EB

 S&P New China Tracker

14.75%

2.85%

5.2775

6.0558

6.2282

0830EA

 NYSE FANG+ Daily (2x) Leveraged Tracker

13.77%

3.31%

4.0000

4.5507

4.7015

0831EA

 NYSE FANG+ Daily (-1x) Inverse Tracker

-7.10%

-2.22%

4.0000

3.7159

3.6334

0832EA

 HSCEI Daily (2x) Leveraged Tracker

8.62%

0.57%

2.0000

2.1723

2.1846

0833EA

 HSCEI Daily (-1x) Inverse Tracker

-4.70%

-0.30%

2.0000

1.9060

1.9002

 

 Developed Markets & Commodities

2019

YTD
(3 Jan 2020)

 UK - FTSE 100 Index

16.6%

0.23%

 MSCI Europe

17.7%

-0.01%

 NYSE FANG+ Index

37.5%

-0.11%

 MSCI World

23.1%

-0.19%

 US - S&P 500 Index

27.4%

-0.35%

 LBMA Gold Price AM USD

16.6%

2.13%

 US Crude Oil WTI

32.7%

2.11%

 

 China Market Indices

2019

YTD
(3 Jan 2020)

 Shanghai Shenzhen CSI 300 index

34.0%

0.28%

 Hang Seng Index

12.6%

0.18%

 S&P New China Sectors Ex-A-Share Index

27.7%

0.15%

 Hang Seng China Enterprises Index

14.0%

0.04%

 MSCI AC Asia ex Japan Index

17.1%

0.04%

 Shanghai Stock Exchange Composite Index

20.2%

-0.06%

 FTSE China 50 Index

14.4%

-0.09%

 MSCI China Index

23.4%

-0.17%

 

 Asian Market Indices

2019

YTD
(3 Jan 2020)

 Dow Jones Asia Pac Select Dividend 30 Index

15.3%

0.70%

 Indonesia - Jakarta Composite Index

4.7%

0.68%

 Malaysia - FBM KLCI Index

-3.1%

0.55%

 Bloomberg Asia Real Estate Investment Trust Index

18.6%

0.41%

 Vietnam - Ho Chi Minh Stock Index

9.4%

0.18%

 Thailand - SET 50 Index

7.8%

0.15%

 Singapore - Straits Times Index

6.6%

-0.14%

 Korea- KOSPI Index

5.0%

-0.14%

 India - S&P BSE SENSEX Index

12.9%

-5.70%

 Japan - TOPIX

16.1%

N/A

Source: Affin Hwang AM, Bloomberg as at 3 January 2020. All prices and returns are quoted in MYR terms.

 


Disclaimer: This article has been prepared by Affin Hwang Asset Management Berhad (hereinafter referred to as “Affin Hwang AM”) specific for its use, a specific target audience, and for discussion purposes only. All information contained within this presentation belongs to Affin Hwang AM and may not be copied, distributed or otherwise disseminated in whole or in part without written consent of Affin Hwang AM. The information contained in this presentation may include, but is not limited to opinions, analysis, forecasts, projections and expectations (collectively referred to as “Opinions”). Such information has been obtained from various sources including those in the public domain, are merely expressions of belief. Although this presentation has been prepared on the basis of information and/or Opinions that are believed to be correct at the time the presentation was prepared, Affin Hwang AM makes no expressed or implied warranty as to the accuracy and completeness of any such information and/or Opinions. As with any forms of financial products, the financial product mentioned herein (if any) carries with it various risks. Although attempts have been made to disclose all possible risks involved, the financial product may still be subject to inherent risk that may arise beyond our reasonable contemplation. The financial product may be wholly unsuited for you, if you are adverse to the risk arising out of and/or in connection with the financial product. Affin Hwang AM is not acting as an advisor or agent to any person to whom this presentation is directed. Such persons must make their own independent assessments of the contents of this presentation, should not treat such content as advice relating to legal, accounting, taxation or investment matters and should consult their own advisers. Affin Hwang AM and its affiliates may act as a principal and agent in any transaction contemplated by this presentation, or any other transaction connected with any such transaction, and may as a result earn brokerage, commission or other income. Nothing in this presentation is intended to be, or should be construed as an offer to buy or sell, or invitation to subscribe for, any securities. Neither Affin Hwang AM nor any of its directors, employees or representatives are to have any liability (including liability to any person by reason of negligence or negligent misstatement) from any statement, opinion, information or matter (expressed or implied) arising out of, contained in or derived from or any omission from this presentation, except liability under statute that cannot be excluded.

 

Warning Statement: A Prospectus is available for the TradePlus Shariah Gold Tracker and TradePlus S&P New China Tracker, while a Master Prospectus is available for the TradePlus NYSE® FANG+TM Daily (2x) Leveraged Tracker, TradePlus NYSE® FANG+TM Daily (-1x) Inverse Tracker, TradePlus HSCEI Daily (2x) Leveraged Tracker and TradePlus HSCEI Daily (-1x) Inverse Tracker (collectively known as the “TradePlus L&I ETFs”), and investors have the right to request a copy of it. Investors are advised to read and understand the contents of the Prospectus dated 28 November 2017 and Supplementary Prospectus dated 2 July 2019 (for TradePlus Shariah Gold Tracker), and Prospectus dated 15 January 2019 and Supplementary Prospectus dated 2 July 2019 (for TradePlus S&P New China Tracker), as well as the Master Prospectus dated 26 November 2019 (for the TradePlus L&I ETFs) before investing. The Prospectus / Supplementary Prospectus / Master Prospectus have been registered with the Securities Commission Malaysia, who takes no responsibility for its contents. An electronic copy of the Prospectus / Supplementary Prospectus / Master Prospectus can be obtained at Affin Hwang Asset Management Berhad’s website www.tradeplus.com.my. As with any forms of financial products, the financial products mentioned herein carries with them various risks. Investors are advised to consider the general and specific risks involved as stipulated in its Prospectus / Supplementary Prospectus / Master Prospectus before investing. There are also fees and charges involved when investing in these funds, and investors are advised to consider the fees and charges carefully before investing. The price of units and distribution payable, if any, may go down as well as up and past performance of the funds should not be taken as indicative of their future performance.

 

Licensing Disclosure Statement & Conditions: The "S&P New China Ex A-Shares Index" is a product of S&P Dow Jones Indices LLC, a division of S&P Global, or its affiliates (“SPDJI”) and has been licensed for use by Affin Hwang Asset Management Bhd. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC, a division of S&P Global (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Affin Hwang Asset Management Bhd. TradePlus S&P New China Tracker is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P New China Ex A-Shares Index.

 

Licensing Disclosure Statement & Conditions: Source ICE Data Indices, LLC (“ICE Data”), is used with permission. “NYSE® FANG+™” is a service/trade mark of ICE Data Indices, LLC or its affiliates and has been licensed, along with the NYSE® FANG+™ Daily 2X Leveraged Index and NYSE® FANG+™ Daily 1x Inverse Index (“Indices”) for use by Affin Hwang Asset Management Berhad in connection with the TradePlus NYSE® FANG+™ Daily (2x) Leveraged Tracker and the TradePlus NYSE® FANG+™ Daily (-1x) Inverse Tracker (the “Product”). Neither Affin Hwang Asset Management Berhad nor the Product, as applicable, is sponsored, endorsed, sold or promoted by ICE Data Indices, LLC, its affiliates or its Third Party Suppliers (“ICE Data and its Suppliers”). ICE Data and its Suppliers make no representations or warranties regarding the advisability of investing in securities generally, in the Product particularly, or the ability of the Index to track general stock market performance. ICE Data’s only relationship to Affin Hwang Asset Management Berhad (“Licensee”) is the licensing of certain trademarks and trade names and the Index or components thereof. The Index is determined, composed and calculated by ICE Data without regard to the Licensee or the Product or its holders. ICE Data has no obligation to take the needs of the Licensee or the holder of the Product into consideration in determining, composing or calculating the Index. ICE Data is not responsible for and has not participated in the determination of the timing of, prices of, or quantities of the Product to be issued or in the determination or calculation of the equation by which the Product is to be priced, sold, purchased, or redeemed. Except for certain custom index calculation services, all information provided by ICE Data is general in nature and not tailored to the needs of Licensee or any other person, entity or group of persons. ICE Data has no obligation or liability in connection with the administration, marketing, or trading of the Product. ICE Data is not an investment advisor. Inclusion of a security within an index is not a recommendation by ICE Data to buy, sell, or hold such security, nor is it considered to be investment advice.

 

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