Financial markets enjoyed some stability, and rose steadily last week ahead of the Easter Holidays. While pandemic infection cases have slowed in some countries, it has also been rising at an alarming rates in others. Nevertheless, the aggressive stimulus packages being rolled out by central banks, along with the slow down in infection cases in previous identified hotspots have led to an improved investor sentiment. Optimism that a resolution has been reached between Russia and Saudi Arabia also provided some support for oil price toward the end of the week. 

 

In the news

  • The continued support by global central banks to cushion the impact of the pandemic has improved investors’ sentiment, supporting financial markets to climb higher last week.  More packages were being rolled out as central banks scrambled to protect its economy from the onslaught of the pandemic.
  • There had been more than 1.8 million infection cases reported as at last week, with more than 110,000 fatalities. However, the easing number of pandemic infections around Europe gave investors some confidence to move back into the financial markets. 
  • US’ S&P 500 Index saw its best weekly performance since 1974 after rising more than 12% in USD terms (11.4% in MYR terms). This was despite the US having the largest number of cases, with over 530,000 confirmed cases and 23,000 fatalities as at last week.
  • The EU’s strongest economy, Germany, has been forecasted by analysts to see its GDP shrink by more than 4% this year as global growth stalls. With the lockdown taking place, unemployment numbers are also forecasted to soar to 5.9% this year. 
  • China’s trading week was shortened as the market closed on Monday for the Ching Ming holiday. After the long weekend, the market rally continued and the Shanghai Composite rose 1.2% higher in MYR terms over the week.
  • The city of Wuhan lifted its 11-week lockdown, which saw consumer behaviour gradually moving back to normalcy.
  • Better performance were seen coming out of China’s New Economy sector, lending support to the 0829EA which rose 3.6% in MYR terms. 
  • The pressure on China’s travel and tourism industry is expected to continue as the government signalled that it will maintain restrictions on its international passenger travels, limiting Chinese airlines just 1 flight per country each week. Nevertheless, in lieu of passenger travel, air freight had seen a boost with more than 200% growth in average across the Asian regions, while US, and Europe saw its numbers more than double as demand for supplies soar and manufacturing resumes.
  • Japan’s economy is expected to slip into recessionary conditions after having suffered through the earlier US-China trade war, and the consumption tax imposed in October last year. This had left businesses reducing its capital spending at its fastest pace since the financial crisis that took place in 2008.
  • Oil price hovered within the USD20 to USD 30 per barrel range last week amidst the uncertainty surrounding a resolution on the waging oil war. However, just before the Good Friday Holiday, Russia and Saudi Arabia reached an agreement to reduce the OPEC’s oil production.
  • The agreement is for oil production to be lowered to manage the oil price as demand remained lacklustre. The cuts would be carried out in tranches with a gradual reduction in cuts over time.
  • While the agreement is said to be valid till end April 2022, a review will be done in December of next year. A meeting will also be carried out in June to determine if additional measures will need to be taken to stabilise markets. 
  • Gold price climbed to almost USD1,700 per ounce following the US Fed’s latest USD2.3 trillion stimulus. The rising pandemic cases globally, along with a weaker global growth outlook has put Gold in the limelight.  The precious metal has risen by 15.6% this year, allowing the 0828EA to rise alongside it with its own gain of 14.6%.

 

In other economic news

  • The US Feds proposed for USD2.3 trillion to be handed out in loans to businesses and municipalities as it looked to prepare for even larger stimulus programs.
  • US continue to see weak employment data last week:
    • Unemployment claims last week remained high, continuing with another 6.6 million Americans filing claims.
    • An estimated 17 million jobs have been lost since mid-March - more than 10% of the total US workforce.
  • The EU announced that it was ready to roll out 3 packages with a total worth of Eur 540 billion (USD 590 billion):
    • Each EU country would be able to request for funding of up to 2% of their GDP for costs related to the pandemic
    • Increased lending capabilities to potentially reach Eur 200 billion 
    • Eur 100 billion initiative to reduce unemployment.
  • Australian equities tumbled after the RBA maintained its benchmark interest rates at 0.25%. The RBA also pre-empted markets to expect higher unemployment numbers as pressure continue to mount on the economy. 
  • Japan equities spiked higher after announcing its latest fiscal stimulus package worth approximately 20% of the country’s economic output (est. USD 990 billion) as the pandemic continues to take its toll on the economy.

 

What to look out for ahead

  • US corporates are set to start its earnings season – and expectations are not high given the current landscape. Banking related stocks are expected to be the hardest hit after the recent sell-off.  How the other sectors perform will remain to be seen.
  • After being the hotspot of the pandemic, countries such as Italy, Spain, France, and the UK are seeing declining fatalities from the virus – signalling a slow in the spread.
  • With numbers already closing in on the 2million mark, all eyes will continue to remain on the measures global leaders will take to protect their citizens and their economy.

 

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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