Last week saw global financial markets ending on firmer ground after improved sentiment boosted demand for risk assets despite the lack of any clear catalysts.  Sentiment boost was largely seen stemming from the better than expected job data flowing out of the US, and optimism that the Feds were looking at more stimulus measures. The S&P enjoyed its best quarterly run since 1998 after it jumped more than 20% higher in 2Q2020, though it has yet to recover from the 1st quarter’s major sell-off.  While price of risk assets soared, Gold price also moved marginally higher, and enjoyed its strongest quarterly gain in 4-years.  

 

In the news

  • Global Covid-19 cases have risen rapidly in recent weeks, triggering fears of a resurgence. There are currently close to 11.5 million cases globally, with more than 500,000 deaths caused by the virus. The US is still the country with the highest number of cases as it closes in on the 3 million mark, with more than 130,000 fatalities so far.
  • After rejoicing from the reopening of businesses, some US states had reversed their plans after cases spiked, stoking fears that hospitals were very near reaching its capacity.
  • Nevertheless, the coronavirus concerns were cast aside during last week’s shortened US trading week after encouraging labour data was released. Markets climbed further when there was increased optimism that we were closer to finding a vaccine.
  • The UK had also fast tracked its infrastructure spending as it puts in place measures to get its economy back on track after being derailed by the pandemic. 
  • The US wasn’t the only markets hitting new highs – China also saw its key indices climbing higher. While there were protests in the streets of Hong Kong after the National Security Law was finally passed, stock prices continued its upward trajectory.
  • The CSI 300 Index hit its highest level since January 2018, and closed last week at 4,419.60. The Shanghai Composite was not to be left out, and spiked to its highest close since January this year. The CSI 300 Index returned 7.2% last week, whilst the Shanghai Composite rose 6.2% in MYR terms respectively over the same period.
  • The consumption-centric S&P New China Sectors Ex A Share Index rose 4.5% last week, allowing the 0829EA to continue its upward climb. The 0829EA has seen a gain of 19.1% in MYR terms on a YTD basis after it rose 3.9% last week supported by the stronger performance of the e-commerce players within its portfolio.
  • The stronger performance of the broader China indices had benefited the 0832EA, which aims to provide the 2X daily performance of the Hang Seng China Enterprises Index, which rose 7.6% last week in MYR terms.
  • The better performance of China’s domestic indices were largely supported by more solid economic data, suggesting that the economy was back on track, and ready to regain ground.
  • Tech-related stocks clawed back to reclaim its position as strongest performing sector after the NYSE FANG+ Index rose 7.9% over the week in MYR terms. Key stocks such as Tesla saw its share price rise by an impressive 26.3% last week, whilst Facebook’s stock price overcame its hurdle of a marketing backlash and regained ground.  Facebook Inc, and Twitter Inc both rose 8.4%, and 6.6% respectively in USD terms last week.  
  • The stronger performance of the tech-sector led the 0830EA, which aims to provide 2X the daily returns of the NYSE FANG+ Index, to rise by a stellar 12.8% last week in MYR terms.
  • It was generally a week of gains even for Gold. Gold price rose 1.1% over the week despite the return of risk appetite as ongoing uncertainties continued to loom over markets.  While sentiment had improved, investors remain sceptical, believing that the underlying risks remain unresolved. 
  • Global Gold ETFs saw its AUM increase for the 15th straight week.  Support for the precious metal is expected to remain strong as global central banks continue to roll out stimulus packages to keep its economic activity afloat, leaving bond yields, and real interest rates supressed. 
  • The 0828EA saw a marginal rise in its NAV last week to bring its YTD gains to 21.4% in MYR terms. 

 

In other economic news

  • US’ encouraging economic data boost market sentiment
    • Tally of payroll processing for private sector jobs climbed 2.4 million in June.
    • The Labour Department provided confirmation by reporting an additional 4.8 million in nonfarm payrolls in June.
    • Unemployment rate fell to 11.1%, from the May reading of 13.3%.
    • Jobless claims decreased marginally to 1.43 million, from 1.48 million previously. 
  • Reopening of businesses strengthens Europe’s economic foothold
    • Unemployment rate in Germany climbed marginally higher from 6.3% in May, to 6.4% in June.
    • Retails sales in Germany rose 13.9% MoM, beating the estimated the consensus expectation of 1.8%.
    • Retail sales rose 3.8% YoY, a surprise outperformance against the expected 3.5% decline by economists.
    • Manufacturing PMI in the EU was also encouraging, as flash manufacturing PMI jumped from 39.4, to 46.9.
    • The UK also saw its manufacturing PMI move back into expansionary territory when it rose to 50.1, from the previous month’s reading of 40.7.
    • Inflation in the EU also climbed higher from 0.1% to 0.3% in June.
  • China sees strong manufacturing data
    • Caixin/Markit Manufacturing PMI jumps to 6-month high with a reading of 51.2 in June.
    • The official PMI also rose to a 3-month high at 50.9 - the 4th straight month of a reading above 50.
    • Car sales have also surged 11% YoY – and a 3rd straight monthly gain.

 

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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