Global economies remained vigilant as the outbreak of the Covid-19 virus spreads. Number of infections, and fatalities continue to rise at a rapid rate, which has led to Europe tightening its lockdown. China has seen a gradual move back to normalcy. In contrast, the US now has the highest number of case. Nevertheless, the US equity market rebounded from the carnage it saw in the previous week on the back of optimism surrounding the monetary stimulus.

 

In the news

  • The US equity markets rebounded, and saw double digit returns as optimism surrounding the stimulus package provided some confidence to the markets. 
  • US Feds introduced the “Secondary Market Corporate Credit Facility”, where it would look into buying Bond ETFs to boost market liquidity.
  • Europe tightened its lockdown after a surge in infections, and fatalities – deepening concerns on the fragility of the economy as the business activity in the EU collapsed.
  • Japan downgraded its economic conditions to “severe” in its March review. It also made the decision to postpone the Tokyo Olympics to 2021, a move that is expected to hit the country’s GDP in the coming fiscal year.
  • China is seeing its economy rebooting, with restaurant chains that have been closed since January starting to reopen its doors to the public. New reported cases from China has tapered down significantly, with the new infection numbers largely blamed on “imported” cases. 
  • Gold price moved higher last week, back above the USD1,600 per ounce level. Expectations of a lower for longer interest rate environment, and more stimulus by the Feds have provided a booster for the precious metal.
  • With little resolution between Russia and Saudi Arabia, oil prices have continued to slide lower and settling somewhat at the USD20 per barrel range.  US Energy stocks have been under heavy pressure as they typically incur a production cost of USD36 per barrel, which is way above the current price. 

 

In other economic news

  • Stimulus packages continue to be rolled out by central banks as it looks for ways to cushion the impact of the virus spread on smaller businesses, and its residents. 
    • The US releases a USD2 trillion stimulus package to support small businesses, and direct payment to the lower and middle income.
    • Similarly, Japan is also working on implementing its stimulus that would see cash payment to eligible households. 
    • Malaysia released a RM250 billion stimulus package – which also targeted SMEs as well as the rakyat.
  • US unemployment claims jumped to 3.3 million, which is 5X more than the previous high. The previous high was recorded in 1982 for 695,000 claims. These numbers are expected to climb higher as the pandemic spreads. 
  • Other economic data being released by the US were also not encouraging:
    • The Markit Manufacturing PMI also dropped to 49.2, from the 50.7 reading in February. Nevertheless, the data was better than the 42.8 expected. 
    • Service sector PMI, whereas, tumbled to 39.1 from the 49.4 reading in February.

 

What to look out for ahead

  • How global economies address the outbreak, as well as the severity of the impact on the individual economies will remain in the headlines as the spread of the virus widens.
  • Volatility for the global financial markets remain at historical highs, and is expected to remain so in the near term as we address the current situation on a global scale.

 

ETF strategies at TradePlus

  • To Hedge:
    • 0828EA – a Gold-backed ETF widely used as a storage of value in times of market uncertainty.
    • 0833EA – a HSCEI Inverse strategy that helps hedge your portfolio against weakness from the performance of China companies listed on the HKex.
    • 0831EA – the NYSE FANG+ Inverse strategy that hedges against the performance of tech stocks listed in the US.
  • To Add Position:
    • 0829EA / 0829EB – a strategy that gives investors exposure into the consumer focused sector through China companies listed in HK, and the US.
    • 0832EA – a 2X leveraged strategy on the HSCEI that captures 2 times the performance of China companies listed on the HKex.
    • 0830EA – a 2X leveraged strategy on the NYSE FANG+ that captures 2 times the performance of US listed tech stocks.

 

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

 

 

Learn more about TradePlus ETFs

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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. 

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