Pandemic concerns were momentarily cast aside last week despite having topped more than 7 million infected cases worldwide. Instead, news were headlined by protestors taking over the streets in the US following the tragic death of George Floyd by a law enforcement officer. Better than expected economic numbers, and with the gradual reopening of global economies however, provided support for a rally in equity markets which left global indices climbing higher for the 3rd straight week.

 

In the news

  • Pandemic cases continue to climb higher as we await a vaccine, and infection cases have now topped 7 million.  The US remains at the top of the table with the highest number of reported infections as it sees its number of cases close in to the 2 million mark.
  • Concerns over the pandemic were momentarily overshadowed by the Black Lives Matter movement, which started in the US following the killing of George Floyd by a law enforcer. The movement saw strong global support as activists across the world marched in protest of racism.
  • As protests continue, the US seem divided in its support for President Trump and his attempts at addressing the civil unrest that is taking place.  
  • Nevertheless, businesses have been gradually reopening, a move that has been taken positively by investors – evident in the improved performance of financial markets.
  • Talks of more stimulus being pumped into the economy amidst an environment of relaxation towards the lockdown measures had helped support stock prices in Europe. The broader index rose 6.9% last week, but has not yet managed to claw back to levels where it started this year.
  • Stocks in China had also risen as trade tensions between the US and China eased, and economic data stayed encouraging.
  • The consumption-centric sectors continued to take the lead, with the S&P New China Sectors Ex A Shares Index leading the pack with a 5.7% gain in MYR terms last week.  On a YTD basis, the index has risen more than 10%, staying far ahead of its peers such as the MSCI China (4.7%), CSI300 (0.7%), Shanghai Composite (-1.5%), and the FTSE China 50 (-2.5%). 
  • The 0829EA has seen a steady gain by tracking the S&P New China Sectors Ex A Share Index, which holds increasingly popular e-commerce names such as Tencent, Alibaba, JD.Com, Meituan Dianping, and Pindoudou Inc within its components. It rose 5.8% in MYR terms last week, bringing its YTD gains to 10.4%.
  • Oil price had trended higher over the week as talks continued for production cuts to be prolonged. Oil price have bounced back from its lows, and have since recorded a 59.7% gain in MYR terms over a period of 1-month. 
  • After a strong run this year, Gold took a breather on the back of an improved risk environment. The LBMA gold price slid 2.6% lower last week but maintained its steady standing YTD, with a stellar 17.1% gain in MYR terms.

 

In other economic news

  • US releases better than expected data – boosts sentiment 
    • Jobs within the private sector was said to have contracted by 2.7 million in May, much better than the expected contraction of 9 million
    • A total of 2.5 million jobs were added back into the job market in May
    • Unemployment rate in the US improved to 13.3%, from the 14.7% in April – beating expectations as some analysts forecasted unemployment to hit 20%. 
  • ECB releases more liquidity into the market as inflation numbers fall
    • Pandemic emergency purchase program  will be increased from EUR 750 billion, to EUR 1.35 trillion and extended till at least June 2021.
    • Proceeds from maturing bonds will be reinvested until end 2022,
    • EU’s inflation slowed to 0.1% in May as energy prices tumbled. The May’s reading slid from the 0.3% reading in April, and is now at its 4-year low.
    • Germany will see a EUR 130 billion stimulus package – a move which would see cuts in VAT, rebates for electric cars, as well as funds for infrastructure upgrades
  • PBoC makes its move
    • RMB 400 billion quota was set for the central bank to purchase up to 40% of domestic loans made by local banks to SMEs
    • SMEs will also see support following a pledge by the PBoC to assist with local banks to provide loan extensions, and interest payment reliefs
    • Policymakers have put in place measures to assist these SMEs following the impact of the pandemic – allowing SMEs to defer interest, as well as principal payments until 2021.
    • Official PMI slides marginally lower from 50.8 to 50.6 in May, and remains in an expansionary phase.
    • Caixin Services PMI rose to 55.0 – a reading that was much better than expected, pushing it back into expansion following the pandemic outbreak.

 

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 copy of the Prospectus / Supplemental Prospectus for the TradePlus Shariah Gold Tracker and TradePlus S&P New China Tracker, as well as the Master Prospectus for the TradePlus NYSE® FANG+ Daily (2x) Leveraged Tracker, TradePlus NYSE® FANG+ 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”) can be obtained at Affin Hwang Asset Management's (“Affin Hwang AM”) website at www.tradeplus.com.my. Investors are advised to read and understand the contents of the Prospectus dated 28 November 2017 and Supplemental Prospectus dated 2 July 2019 (for TradePlus Shariah Gold Tracker), and Prospectus dated 15 January 2019 and Supplemental 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. There are fees and charges involved when investing in the funds stated herein. Investors are advised to consider and compare the fees and charges as well of the risks carefully before investing. Investors should make their own assessment of the risks involved in investing and should seek professional advice, where necessary. 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. The Securities Commission Malaysia has not reviewed this material and takes no responsibility for the contents of this material and expressly disclaims all liability, however arising from this material.

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