The coronavirus continues to take its toll on markets with global confirmed cases now above 4 million. Markets took positively to easing measures announced by countries as economies started to reopen for business. Record high unemployment rate in the US failed to quash its equity market rally as tech stocks led major US indices to close the week higher.

 

In the news

  • Financial markets climbed higher after news that more economies were looking to ease its lockdown measures in view of allowing businesses to reopen. Additionally, news that the US FDA has provided an approval for trials of a possible vaccine helped provide support for the markets.
  • With a positive week for US markets and the strong thrust of the technology sector, the Nasdaq Index is now back in positive territory for this year.
  • With technology stocks staying in the limelight, the FANG+ Index benefited and rose 7.7% last week. Technology names have remained in resilient throughout the current crisis, with e-commerce-focused companies reaching out and providing their services to the millions who have been confined at home.
  • The 0830EA benefited from the stronger performance through its underlying of tech giants such as Facebook, Amazon, Apple, Netflix, Google, Tesla, Twitter, Alibaba, Baidu, and Nvidia.
  • China’s equity market reopened after its trading holiday to resume its climb as public health risk led by the pandemic crisis continued to ease.
  • The China-centric consumption sector took the lead with a 3.4% gain in MYR terms last week as gauged by the S&P New China Sectors ex A Share Index.  The index, which has a tilt towards the e-commerce sector rose as investors continued to focus on tech-related names. The 0829EA rose alongside the index, and currently stands at a 3.0% gain YTD. 
  • Geopolitical concerns re-emerged when Trump announced he was prepared to terminate the US-China trade deal if China did not increase its purchase of US goods. Discussion between the 2 economic giants were held at the end of the week with reaffirmation of a commitment by both parties, which helped ease tensions.
  • Over the weekend, Malaysian PM Tan Sri Muhyiddin Yassin announced that the CMCO would be extended till the 9th of June, though with the relaxation to the order, more businesses have started to reopen its doors last week. 
  • Oil price bounced back with a 24.8% gain in MYR terms last week, a 2nd consecutive week of positive gains. Support was seen coming from the oil production cut which started to take effect, as well as the reopening of parts of the global economies which is anticipated to drive demand for oil. 

 

In other economic news

  • The US market rejoiced on the fact that data was not as weak as expected:
    • A total of 3.2 million citizens made unemployment claims last week – marking the 5th straight weekly decline in claims.
    • Payrolls fell by 20.5 million in April.
    • Unemployment rate spiked to 14.7% - the highest reading since 1929.
  • Bank of England warns of a bleak economic outlook:
    • Expects GDP to drop by 14% in 2020, but also looks forward to a rebound of 15% in 2021.
    • Policy makers voted to increase its bond-purchase program.
    • Interest rates were kept unchanged.
  • Promising numbers flowing out of China signals that its economy may have found its footing:
    • Merchandise exports rose 3.5% YoY (vs the forecasted double digit declines), improving from the -6.6% reading in March.
    • Imports slid 14.2% YoY in April, declining further from the -1.0% in March
    • Trade surplus widened to USD43.5 billion in April

 

What else?

  • China liberalised its financial markets, announcing that it would ease the process for foreign investors to participate in the domestic financial markets. This effectively abolishes the quota restrictions for QFII, and RQFII schemes that were earlier put in place, and eases repatriation of funds for investors.

 

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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