Global pandemic numbers rose by 3 million last week, bringing the grand total to over 67 million cases as governments and suppliers scramble to prepare for the distribution of vaccines. Hopes of a refreshed stimulus package in the US were reignited as senators proposed a bipartisan package worth USD0.9 trillion. US-China tensions continue, as the US announced more restrictions against US-listed Chinese equities and military linked-companies. Gold price rebounded throughout the week with hopes of new stimulus aid, rising infection in the US and the weakening dollar.

 

In the News

    • The world added over 3 million new coronavirus infections last week, bringing the total to over 67 million cases, with 1.5 million deaths recorded. The US saw record high daily infections for 3 days in a row, and reported over 2,000 deaths daily for two weeks.
    • Vaccine wise, Pfizer obtained approval from the UK for emergency use for its vaccine in the country, but was hampered by news of a supply chain disruption for the vaccine. However, it was later affirmed that the delivery for 50 million doses promised for this year continues to be on track.
    • Hopes for an added stimulus in the US was reignited last week after news that a bipartisan group of senate members proposed a USD908 billion package. The US Treasury, which previously requested the return of emergency lending funds from the Federal Reserve, urged legislators to tap into CARES Act funds to provide targeted relief. 
    • Positive momentum persevered in US markets last week, with all major indices ending the week at record highs. The best performing index last week was the tech-focused Nasdaq, recording 1.93% of gains throughout the week, while the S&P500 index gained 1.48% last week. 
    • However, the performance of the NYSE FANG+ Index was lacklustre as compared to its peers, gaining 1.48% in MYR terms last week as the prospects of a reopening led to a correction in bigger tech names. The 2x Leveraged 0830EA saw 3.01% return throughout the week. The ETF has generated a handsome YTD return of 134.55%. 
    • Chinese markets continued to see gains after PMI readings hit record highs, solidifying its recovery from the pandemic despite news that the US Defense Department added 4 more Chinese companies into its banned list of Chinese companies related to the military. Over the week, CSI 300 Index gained 2.24% while the Shanghai Composite Index were up 1.60% in MYR terms. 
    • However, there was a divide in performance of A-shares versus offshore Chinese equities, as the House of Representatives in the US accelerates its vote on a bill that would threaten Chinese equities listed in the US, potentially affecting companies like Pinduoduo and Baidu, which do not have a second listing outside of the US. 
    • As a result, the S&P New China Sectors Ex A Share Index, which invests into ex-A shares recorded a dip of 1.80% throughout the week, reacting to the negative news. While the 0829EA also dipped by 1.73% last week, the ETF is still recording YTD returns of 31.88% in MYR terms.
    • Locally, the broader market ended the week with 0.89% gains as market rotation activity continued, buying into stocks that would benefit from economic recovery and selling down healthcare names following more positive vaccine news. Throughout the week, the Dorsey Wright Technical Leaders Malaysia MYR Index managed to outperform the broader index, recording 3.94% of gains while the 0836EA followed suit, ending the week 3.46% in the green. 
    • Gold prices reversed its negative momentum last week, rebounding 1.54% throughout the week. The rebound could be attributed to the weakened dollar movement throughout the week, coupled with regained hopes of a stimulus package in the US and record high pandemic infection numbers. During the week, the 0828EA upped 1.51%, with a YTD return of 18.53% in MYR terms.

 

On the Economic Data Front

  • US economy slowing down, data shows:
    • Non-farm payrolls growth recorded at 245,000, missing expectations by almost half.
    • Unemployment rate fell to a pandemic low of 6.7%, but could be partly attributed to a decline in labour force participation rate.
    • Pending home sales data shows drop for the second consecutive month in October.
       
  • China PMI readings shows extended recovery:
    • Official manufacturing PMI numbers recorded at 52.1 in November, its 9th consecutive monthly growth.
    • Private manufacturing PMI recorded at 54.9, beating expectations to its highest gauge since 2010 as it records its 7th monthly consecutive expansion.

  • Brexit negotiations drag on, EU to push through recovery fund:

    • Post-Brexit negotiations between the EU and UK continues as disagreements persists, while France threatens to veto if the deal does not align with its interests.
    • The European Commission plans to exclude Poland and Hungary from its pandemic recovery fund which is part of its proposed 7-year budget should objections persist.

 

ETF strategies at TradePlus

 

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

 

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