The coronavirus pandemic was brought back into focus last week, as worsening case numbers in the US and Europe regions continue to spark concerns. However, the positive development on vaccines which saw efficacy rates that beat expectations by a large margin, triggered market rotation activity from WFH stocks to travel oriented names. In China, newly surfaced antimonopoly policies and refreshed geopolitical uncertainties contributed to the negative market sentiment. Gold prices also slid as investors turned to risk assets in response to the positive vaccine news.

 

In the News

  • The pandemic regained the spotlight last week, as positive vaccine news temporarily cast aside worries on the increasingly rapid rising case numbers as the winter months approach. To date, the world has now recorded over 54.8 million cases, with over 1.3 million deaths.
  • Pharmaceutical company Pfizer announced its preliminary data showed that its vaccine candidate was 90% effective in preventing infections, an efficacy level that highly beat expectations. The company also announced that it would begin distributing the vaccine by the end of the year.
  • Politically, uncertainties continue to rise as President Donald Trump refused to concede the elections, while the White House has been rumoured to be dropping out of stimulus negotiations. President Trump also issued an executive order last week to ban U.S investments in companies that have Chinese military ties. 
  • The Dow Jones Industrial Average outperformed its counterparts last week, gaining 4.08% as the market turned to cyclical stocks, reacting to the positive vaccine news. Tech-heavy Nasdaq slid 0.55% throughout the week as stay-at-home stocks experienced selldowns, with the NYSE FANG+ Index dipping 4.10% over the week. The 0831EA benefitted from the slide, gaining 3.92% over the week.
  • In China, its biggest sale of the year, the Single’s Day sale generated around USD 75 billion in Gross Merchandise Value (GMV) for Alibaba (up 26% y-o-y)  while JD saw approximately USD 41 billion in GMV (up 33% y-o-y), as “revenge spending” and the diversion from outbound spending to domestic served as key drivers for the jump.
  • Despite the jump in Single’s Day sales activity, Chinese stocks experienced selldowns triggered by the release of China’s draft antimonopoly regulations aimed to control the influence of Chinese tech giants in the market, along with President Trump’s executive order that bans investment into military-linked Chinese companies. 
  • The Shanghai Composite dipped 0.13% while the CSI 300 Index slid 0.66%. The S&P New China Sectors Ex A Share Index dipped 0.39%, dragged down by major internet names with Alibaba being one of the major detractors after weaker sentiment caused by the regulator’s halting Ant Group’s scheduled listing.  
  • The 0829EA saw its NAV dip marginally on Friday after going ex-dividend , adjusting its NAV from its maiden cash distribution of MYR 20 sen (HKD 38 cents) per unit. The ETF is still posing YTD gains of 36.74% in MYR terms on a NAV to NAV basis.
  • Locally, markets reacted to the positive news in vaccine development, as well 3rd quarter GDP numbers that showed strong rebound in the economy. As a result, the KLCI index continued its upward momentum from last week, ending the week 4.61% in the green. 
  • However, the DWA Malaysia Momentum Index lagged in performance as market rotation activity was also seen locally, causing a selldown in tech and glove names in the index. Over the week, index gained 0.23% while the 0836EA upped 0.55%.  
  • The REITs sector improved last week on the back of optimism surrounding the vaccine. Prices for Retail REITs climbed higher on the better sentiment, which saw the MSCI AC Asia ex Japan IMI / EQ REITs HDY Tilt Cap Index climb 1.71% higher, leading the 0837EA to also rise 1.59% higher. 
  • Gold price slid 3.72% last week as investors turned to risk assets following the positive vaccine news. The 0828EA followed the negative trend of gold prices, dipping 3.78% throughout the week in MYR terms. The ETF is still recording 22.9% YTD returns in MYR terms. However, potential in the precious metal can still be seen as the world continues to grapple with the rapidly rising pandemic cases around the world.

 

On the Economic Data Front

  • US economic data paints mixed picture:
    • Initial jobless claims fell for the fourth consecutive week to the lowest since the beginning of the pandemic, recorded at 709,000. 
    • Continuing claims fell below 7 million for the first time since March.
    • Preliminary measures of consumer sentiment showed that November data fell to a three-month low, missing expectations.

  • Europe hints as additional monetary support:
    • The European Central Bank has hinted that it would expand its pandemic emergency purchase program (PEPP) and targeted longer-term refinancing operations (TLTRO)
    • UK GDP rebounded at record high of 15.5% for the third quarter
    • However, economic growth missed expectations in September, recording at 1.1% expansion.

 

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

 

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