Optimism and hope held up global financial markets last week. Despite the overall bleaker global outlook, financial markets climbed higher on sentiment support from news that the US are stepping up efforts to address the rapidly rising pandemic infection cases. Oil price remained weak even after an agreement was reached to cut production. Gold price continued its upward climb, which also saw global physically-backed Gold ETFs recording steady growth in assets.


In the news

  • Pandemic infection cases global have now exceeded the 2million mark, with more than 30% of these cases being recorded in the US alone.
  • Reports that patients in the US were reacting well to treatment with a Gilead antiviral medication did however boost the general sentiment, and helped the US markets move higher over the week.
  • The improved sentiment spread across markets, helping most major indices to end the week higher.
  • Technology-related stocks led the race, evident by the strong performance of the NYSE FANG+ Index which spiked 12.1% in MYR terms over the week as its underlying names enjoyed double-digit returns (Tesla +31.6%, Amazon +16.3%, Netflix +14.1%, Nvidia +11.2%). The 0830EA which aims to provide a 2X leveraged performance on the index rose 17.6% last week. The Index holds an equal weight into tech giants such as Facebook, Amazon, Apple, Netflix, Google by Alphabet, Alibaba, Baidu, Tesla, Twitter, and Nvidia.
  • US banks were the first few to release their quarterly earnings results, and as expected, profits were weak.  The banking sector is expected to remain under pressure as margins from loans are squeezed on the back of lower interest rates, and rising loan defaults.
  • Investors were also gaining confidence on the market as news broke that some economies are already putting in place plans to reopen the market, especially the EU bloc as the pandemic crisis ease. 
  • China equities also rose higher, with the New China Economy rising more rapidly as compared to its conventional peers. It rose 4.4% in MYR terms last week while the Shanghai Composite rose 2.4%, and the CSI300 Index 2.7% over the same period. 
  • The 0829EA which tracks the S&P New China Sectors Ex A Share Index rose 4.8% over the week, benefiting from its tilted focus into the consumption-related sectors. This includes e-commerce giants like Tencent, Alibaba, JD.Com, and Meituan Dianping, which have done well given the larger role it played during the containment measures. 
  • Oil price continued to trend lower last week, despite the production cuts. Indicating that there has clearly been a significant reduction in global demand, the oil giants have expressed that they are willing to collaborate to stabilise world oil prices. 
  • Gold price broke through its 7.5 year high when it breached the USD1,700 per ounce level. Despite the better sentiment, Gold has continued to steadily climb higher – the 0828EA is a physically-backed Gold ETF that tracks the performance of the Gold price has climbed 3.3% last week, bringing its YTD returns to 18.4% in MYR terms.


In other economic news

  • As expected, US released weaker data on the back of pressures from the current landscape:
    • Retail sales down 8.7% in March – the largest monthly decline ever recorded
    • Industrial production declined 5.4% - the worst decline since 1946
    • Manufacturing slumped 6.3%
    • 5.2 million Americans filed for unemployment claims last week
    • Total unemployment claims for the last 4 weeks has risen to 22 million
  • Not surprising, 1st quarter data flowing out of China was also weak as the economy comes out of its lockdown measures:
    • Economy contracted by 6.8% - its first economic contraction since 1976.
    • Retail spending dropped 19% over the quarter,
    • Exports declined by more than 13%, and
    • Fixed income investments slipped 16% lower. 
  • The IMF is forecasting the EU economy to shrink by 7.5% in 2020 on the back of mounting pressures.
  • ECB President has expressed that the central bank is willing to do whatever it takes to help the EU pull through the crisis, and are prepared to increase the size of its asset purchase program if necessary.
  • The IMF has forecasted most economies to shrink this year as it grapples with the impact of the pandemic crisis - the exception being China, and India, which are expected to see growth, albeit at a much slower rate than it has previously enjoyed.


What to look out for ahead

  • More earnings results are expected to be released by US corporates, but expectations for results are not high given the disruption from the pandemic crisis.
  • Markets will continue to look out for the development of the pandemic in global economies, as well as focus on the plans that are being put in place as countries look towards re-opening its economies.


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



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Warning Statement: A Prospectus is available for the TradePlus Shariah Gold Tracker and TradePlus S&P New China Tracker, while a Master Prospectus is available for the TradePlus NYSE® FANG+TM Daily (2x) Leveraged Tracker, TradePlus NYSE® FANG+TM 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”), and investors have the right to request a copy of it. Investors are advised to read and understand the contents of the Prospectus dated 28 November 2017 and Supplementary Prospectus dated 2 July 2019 (for TradePlus Shariah Gold Tracker), and Prospectus dated 15 January 2019 and Supplementary 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. The Prospectus / Supplementary Prospectus / Master Prospectus have been registered with the Securities Commission Malaysia, who takes no responsibility for its contents. An electronic copy of the Prospectus / Supplementary Prospectus / Master Prospectus can be obtained at Affin Hwang Asset Management Berhad’s website www.tradeplus.com.my. As with any forms of financial products, the financial products mentioned herein carries with them various risks. Investors are advised to consider the general and specific risks involved as stipulated in its Prospectus / Supplementary Prospectus / Master Prospectus before investing. There are also fees and charges involved when investing in these funds, and investors are advised to consider the fees and charges carefully before investing. 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. 

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