After some weeks of being cast aside by optimism and better than expected economic data, the economic effects of the coronavirus pandemic has crept back into the limelight, pressuring global financial markets lower. Plans for a wider reopening of businesses in the US raised concerns as the country continues to face surging rise of cases. The US now has more than 2.6 million reported cases, and close to 130,000 fatalities as it continues to grapple with containing the virus. Amidst the rise in uncertainties, Gold jumps back into demand, rising more than 2% last week.

 

In the news

  • Global financial markets slid lower for the 2nd week as concerns surrounding the surge in cases re-emerged, causing a stumbling block for global economies looking to reopen its doors.
  • The US, who continues to grapple with containing the pandemic, saw its infection cases spike in some states after lifting its movement restrictions, which left the restrictions to be reinstated. The rapid rise in hospitalisation cases also caused shortage concerns as some hospitals were seeing more than 97% of its ICU beds being utilised.
  • IMF reported that the global economy is expected to shrink by 4.9% this year– a lower revision on the 3.0% decline forecast that it made in April. The lower revision was attributed to the effects of the pandemic, as citizens continue to take precautionary measures despite the reopening of businesses. 
  • The traditional banking stocks took a hit at the end of the week after the Feds expressed plans to restrict the banks from making dividend payouts, and share buybacks. This left the MSCI World Finance Index tumbling 3.6% lower in local currency terms as prices of major banking stocks fell.
  • After weeks of positive gains, the tech-sector took a hit last week, sliding 3.5% lower in MYR terms. Tech giant, Facebook Inc, saw its share price take a nose dive after major advertisers such as Unilever, and Starbucks decided to move away from advertising on the platform on the back of controversies surrounding Facebook’s inability to effectively police hate speeches. Price of Facebook shares dove 9.5% in local currency terms, while Twitter Inc tumbled 13.1%.
  • The 0831EA, which aims to provide a -1x return of the daily performance of tech-focused NYSE FANG+ Index, rose 2.9% in MYR terms last week after major tech stocks slid lower.
  • Tensions between the US and China continued to loom over markets. Though there was a sigh of relief after President Trump tweeted that the trade deal was “fully intact”, tensions rose when news that the officials from China had warned of retaliatory actions if the US continued to meddle in its affairs on Hong Kong, and Taiwan.
  • China’s broader equity indices rose last week, staying ahead of its peers. Sentiment was elevated after the government announced that it would look to allow foreign investments to flow into more sectors within the economy.
  • The on-shore CSI300 index rose 1.2% last week while the Shanghai Composite, and the broader MSCI China climbed marginally higher. The consumption-focused S&P New China Sectors Ex A Share Index remained at the top of the table for the year, with a 14.4% gain in MYR terms, whilst the CSI300 and Shanghai Composite Index saw it YTD gains climb to 4.0% and 0.5% respective.
  • Tensions also intensified between the US and Europe after the US threatened to impose tariffs worth USD3.1 billion on products coming out of the EU, and UK.
  • After weeks of climbing higher, oil price slid 3.1% lower in MYR terms to end the week at the USD38 per barrel range. Concerns surrounding rising inventories, and weaker global growth prospects put pressure on oil price.
  • Amidst the uncertainties, Gold price moved 2.1% higher last week as investors shied away from risk assets. The 0828EA crept back into the limelight and climbed higher to bring its YTD gains to 20.1% in MYR terms. 
  • It has been an upward trajectory for Gold price since the major sell-off in all asset classes in March. Demand for the precious metal has remained well supported on the back of the uncertainties that have continued to loom over global markets. Analysts expect the trend to continue as investors seek refuge in safer haven assets amidst the lack of clarity.

 

In other economic news

  • US data surprises on the upside? 
    • Service sector PMI jumped to a 4-month high of 46.7 in June, from the 37.5 reading in May.
    • Similarly, the manufacturing sector activity also rose to a 4-month high from 39.8 in May to 49.6 in June.
    • Jobless claims remained high at 1.48 million last week, which was more than the 1.35 million estimated by analysts.
  • Economic data out of Europe shines a light of promise 
    • PMI data for the Eurozone jumps in June to 47.5, from 31.9 in May.
    • The reopening of businesses within the continent generated a post-lockdown rebound as retail spending, and dining restarted.
  • The PBoC look at alternative ways to increase liquidity without moving interest rates
    • The PBoC kept interest rates unchanged as investors await more easing measures from the central bank.
    • It has been reported that the government has urged banks to assist smaller businesses by lowering lending rates, deferring loan repayments, as well as cutting fees – a move that is said to possible impact the banks’ books by more than USD200 billion.
    • Housing sales have increased despite the rise in unemployment, with Tier 2 home sales rising by 10% YoY.

 

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

www.tradeplus.com.my
www.facebook.com/TradePlusbyAffinHwangAM
#tradeplusaham
+(60) 12 250 8002
TradePlus ETF

 


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 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.

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. 

ICE DATA AND ITS SUPPLIERS DISCLAIM ANY AND ALL WARRANTIES AND REPRESENTATIONS, EXPRESS AND/OR IMPLIED, INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, INCLUDING THE INDICES, INDEX DATA AND ANY INFORMATION INCLUDED IN, RELATED TO, OR DERIVED THEREFROM (“INDEX DATA”). ICE DATA AND ITS SUPPLIERS SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY WITH RESPECT TO THE ADEQUACY, ACCURACY, TIMELINESS OR COMPLETENESS OF THE INDICES AND THE INDEX DATA, WHICH ARE PROVIDED ON AN “AS IS” BASIS AND YOUR USE IS AT YOUR OWN RISK.