All eyes were glued on the US Presidential Election as the country went to the polls to elect its 46th President. Concerns over the rapid spread of the COVID-19 pandemic were temporarily cast aside last week, as investors jumped back into the market. Risk assets across most major indices climbed higher, while the Dollar weakness provided support for Gold price to rise alongside risk assets. It was only after the trading week that we saw the results being announced, with Joe Biden being elected as the 46th US President.

 

In the News

  • Global markets were focused on the US last week as Americans turned to polling stations to cast their vote for their 46th President. It wasn’t until the weekend that we saw vote counts confirming Joe Biden as the country’s latest president-elect, alongside his running mate, Kamala Harris as his vice-president elect. 
  • Concerns surrounding the rapid rise in pandemic cases were momentarily cast aside despite now having more than 50 million cases globally, and resulted to more than 1.25 million fatalities. Stricter lockdown measures are expected to take place across the globe as we continue to scramble for a vaccine.
  • England, Greece, and France have all announced lockdown measures to prevent further spread of the virus, while Spain imposed nighttime curfews.  Malaysia also announced stricter movement controls as case numbers continue to rise.
  • The effects from the pandemic continue to weigh on economic growth, leaving global central banks to maintain an accommodative stance. Last week saw the US Feds leaving its interest rates unchanged, while keeping open the possibility of an expansion to its QE program.
  • The tech-sector regained its position as one of the top performers, with the NYSE FANG+ Index gaining 7.86% over the week, and contributed to the 16.63% returns for 0830EA. Returns from the tech-sector outpaced that of the broader market, as the S&P 500 rose 6.68% in MYR terms over the same period.
  • The Bank of Japan reiterated that it will not be altering its ETF-buying program. The BoJ anticipates to invest USD115 billion into ETFs annually, stating that the program is aimed to prevent significant market swings, and aimed at protecting investors’ sentiment.
  • China’s equity market rose over the week on optimism that Biden would be able to clench the Presidential seat from Trump, which would help mend the current strained relationship between the US, and China.
  • Investors’ sentiment was further boosted with the stronger economic data flowing out of China, a momentum that investors anticipate to continue till year-end. The Shanghai Composite, and the CSI 300 Index both rose 3.35%, and 4.69% respectively, while the consumption and services-focused S&P New China Sectors Ex A Share Index rose 7.31% with the support of its tech stocks. 
  • The 0829EA, which tracks the S&P New China Sectors Index, has enjoyed a steady climb over the course of the year, recording a YTD gain of 38.36% in MYR terms and announced that it will be making it’s 1st income distribution this quarter.
  • China’s consumption sector stocks have continued to do well as domestic consumers shift back into the market with its “revenge spending”. More support is expected to be seen with the up-coming Single’s Day sale. 
  • The suspension of the highly anticipated Ant Group IPO shocked global markets after the news was announced 2 days prior to its debut. The brakes were pulled after regulators found that the Company no longer met the regulator’s listing requirements. Ant Group is said to be refunding its IPO investors, along with brokerage fees and interest.
  • Closer to home, the domestic market also climbed higher as sentiment improved. Whilst the KLCI inched 3.60% higher last week, momentum stocks enjoyed a stronger run, benefitting the 0836EA which rose 3.94% over the same period.
  • Glove stocks continued its upward momentum, gaining further support with the absence of the earlier mentioned “windfall tax” in the budget which was announced last Friday.
  • Gold price spiked last week led by the uncertainties surrounding the outcome of the US presidential election. But with the US Dollar losing ground, analysts are expecting support for the precious metal if volatility in the equity market continues. The 0828EA rose 3.21% last week after Gold price breached the USD1,950 per ounce level, the highest since September. Gold remains one of the strongest performing asset class this year, with the 0828EA already recording a YTD gain of in excess of 27% in MYR terms. 

 

On the Economic Data Front

  • US data shows promise:
    • 638,000 jobs were added last month.
    • Unemployment rate dipped from 7.9% in September, to 6.9% in October.
    • Concerns have, however, arisen over the sustainability of the job numbers as stricter lockdown measures may dampen numbers.

  • China continues to see growth:
    • October’s Caixin/Markit PMI at 53.6 - sees growth for the 6th straight month – highest reading since Jan 2011.
    • Official PMI released at 51.4 – beating expectations of 51.3.

 

ETF strategies at TradePlus

 

A look at the performance of the TradePlus ETFs, and major global indices

 

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