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

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