Global financial markets ended the week on a mixed note as fears of a resurgence of the coronavirus pandemic dampened market sentiment. The tech sector was again seen to be a key driver for markets, as the stay at home stocks pushed higher. Pandemic cases continued to surge over the week, with the US seeing up to 60,000 cases being reported on a single day. Fears that the pandemic is far from over has cast a shower over global economies, putting pressure on global financial markets. While oil price has stabilised, fears of a resurgence is expected to put downward pressure on prices. We also saw gold price climb steadily higher as investors took on a more cautious view on markets given the current environment.
In the news
- Global pandemic cases continued to rise and now nears the 13 million mark. The US saw a rapid rise in number of new cases and even reported more than 60,000 new cases on a single day. US infection cases have now totalled more than 3.3 million.
- Fears that the resurgence of cases will see lockdown measures being put back in place have led to the rise in “work-from-home” stocks, especially the FAANG names. Over the week, the NYSE FANG+ Index rose more than 11% higher to bring its YTD gains to more than 60% in MYR terms. The stronger performance of the tech sector helped pushed the 0830EA to end the week with a 26% gain. The spike was largely contributed by the stronger performance of Tesla which rose 27.8% in local currency terms, while names such as Amazon, Twitter, Netflix, and Alibaba jumped more than 10% higher over the same period.
- Equities in China rallied, with its major equity indices seeing strong performance over the week. The Shanghai Composite rose to a 2-year high and ended the week with a 8.0% gain, whilst the CSI300 Index rose 7.8% in MYR terms last week. These major indices are now seeing double digit YTD gains, with the S&P New China Sectors Ex A Shares Index topping the table with more than 25% gains recorded over the period in MYR terms.
- The stronger performance of the index had contributed to the gains for the 0829EA / 0829EB, which has seen its NAV rise by 24.8% in MYR terms on a YTD basis.
- Analysts have upgraded their forecasts on the country’s economic growth after the release of more encouraging data points. Export numbers are also forecasted to improve with the support of global demand for medical supplies, and personal protection equipment, which are anticipated to surge on the back of the on-going pandemic.
- Additionally, China has also seen improving corporate earnings numbers coming out of domestic corporates on the back of a better economic backdrop.
- Oil price has remained stable, trading within the USD40 per barrel range as the controlled supply from OPEC helped keep prices under control.
- The underlying uncertainties have continued to loom over global economies, pushing safe haven assets such as Gold higher. Price of the precious metal jumped to a fresh 9-year high, and closed the week at USD1,805 per ounce to bring its weekly gains to 1.25% in MYR terms. The 0828EA, which tracks the performance of Gold price has seen its NAV gain 22.9% on a YTD basis.
In other economic news
- US economic data surprised on the upside:
- ISM data indicated that activity within the service sector has improved.
- Investors sentiment was also boosted by better job data. Weekly unemployment claims trended lower, and was recorded at 1.3 million last week. This marks a decline of 99,000 claims compared to the previous week.
- Europe anticipates slower recovery:
- Bank of England warns its banks to prepare for negative interest rates in the UK.
- ECB President suggests a pause in more loosening measures from the next policy meeting.
- Warns instead that recovery would be constrained, uncertain, and fragmented.
- China’s data points to a recovering economy:
- Consumer price inflation rises 2.5% as expected in June – largely attributed to the rising prices for pork, and vegetables.
- Manufacturing sector shows modest signs of improving when its producer price index (PPI) rose 0.4% in June, a recovery from the decline of 0.4% seen in May.
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
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.