Markets overcame a bumpy start and ended the week in the green supported by optimism that the Coronavirus would be contained. This gave equity markets a booster, nudging US equities to new highs while keeping most other markets in the green. With little economic data expected from major economies this week, we reckon that markets’ focus will remain on the development of the Coronavirus.

 

In the news

  • While markets dipped after seeing reports of a spike in the number of Coronavirus reported cases, it was quick to recover and continue its upward climb to end the week marginally stronger supported by optimism that the virus would be contained. 
  • The World Health Organization eased concerns when it reported that cases outside the Hubei area were declining.
  • The IT sector remains a driver for the stellar performance of the US market as earnings season winds down. One stand-out performer was Nvidia whose share price rose 15.2% in MYR terms last week after it reported a 41% jump in revenue for 4Q2019.
  • This helped boost the performance of the NYSE FANG+ Index, which led the pack in gains for the week after rising by a stellar 3.9% in MYR terms.  The strong gains propelled the 0830EA (TradePlus NYSE FANG+ Daily (2x) Leveraged Tracker) 7.2% higher over the same period. 
  • Alibaba explained that the recent situation has led to a change in consumers’ buying patterns, with a spike in demand for food delivery.
  • US Fed Chairman stated that its stand on its interest rate policy may change depending on how the impact from the virus outbreak pans out.  
  • Tensions between the US and China was re-ignited after the US accused Huawei and 2 US subsidiaries of alleged conspiracy to steal trade secrets.
  • Asian companies were seen to be releasing better earnings growth as compared to its US counterparts, but failed to catch up to the US equity markets’ performance as expectations for Asian companies remained higher. 
  • Malaysia reports its GDP reading of 4.3% for 2019 - a 10-year low.  The weaker reading was attributed to weakness is private consumption, and external demand. With this, markets are now expected a possible stimulus to be announced, and more rate cuts to come.
  • Weakness in Malaysian GDP numbers – weaker oil prices.  Expected announcement on possible stimulus.  Likely to see more rate cuts ahead.
  • Gold price has also moved up higher alongside riskier assets as it remains unclear how long the current situation will continue for. The LBMA Gold price rose 0.5% in MYR terms last week, while the 0828EA (TradePlus Shariah Gold Tracker), the Gold-backed ETF listed on Bursa rose 0.4% over the same period.
  • Oil price remain under pressure as global growth expected to be dragged down from the effects of the Coronavirus.

 

In other economic news

  • US released mixed data last week:
    • YoY inflation hit 2.5% in January, the highest reading since Oct 2018.
    • Jobless claims remained at multi-decade lows.
    • Retail sales rose by a respectable 0.3% in January.
    • Industrial product, however, slid for the 2nd consecutive month.
  • The EU bloc’s economy remain under scrutiny after reporting a mere 0.1% expansion last quarter, bringing its full year’s growth to 0.9%.

 

What to look out for ahead?

  • We can expect the US to report its existing home sales numbers, along with the US Services PMI after Monday as the US equity markets will be closed in conjunction with Presidents’ Day.
  • Japan will be releasing its 4Q GDP this week under the shadow of weaker expectations caused by the negative impact of the consumption tax, weaker global growth, and weather impact.
  • On the back of a relatively quiet week on the economic data release front, we anticipate markets to be focusing on the development surrounding the Coronavirus.
    • Equity markets have been keeping steady despite the impact from trade disruptions, and softer demand for commodities from China.
    • With markets generally bouncing back after the big decline (historically, as seen from the SARS outbreak), would it be time to make a move for your portfolio?
  • To Hedge:
    • 0828EA – to hedge your portfolio with some Gold exposure.
    • 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 Increase 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 – which has since risen by 21.8% YTD.

 

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

 

 

Learn more about TradePlus ETFs

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